The gullible

CHINA

Trust me. I’d rather break my other leg than revisit this topic. Alas, we must.

Two days ago this pathetic blog was overrun with people who love to blame rich immigrants for jacking prices and erasing their dream of living in midtown Toronto or (especially) Vancouver in a house they can afford. It’s a short trip from that to racism, intolerance, xenophobia and simple hating. As we saw. And a load of folks obviously do not distinguish between Chinese people (from China) who buy up properties here and other Chinese people (from Richmond or Unionville) who were raised locally and just want a house. Of course the latter are not Chinese. They’re Canadian. Get over it.

The perceived injustice is exacerbated by the fact there are no reliable stats on where buyers in a specific market actually come from. Now municipal Van politicos want to collect those numbers (somehow), presumably so they can enrage the masses and impose ownership restrictions.

But what if all of this angst is embarrassingly misplaced? What if cash-drenched foreign buyers represent a small portion of area sales, and affect values only in narrowly-defined hoods and price ranges? What if foolish average house prices in, say, Vancouver were simply the result of fools buying them? Then wouldn’t the real estate industry have a big stake in making sure you were pushed into a purchase by the perceived Yellow Peril? Buy now, or buy never.

Actually we do have some numbers. No, they are not for Vancouver but instead the city of Victoria, which is a few puddles away. Turns out the Victoria Real Estate Board does keep track of who’s buying what where, and isn’t shy about sharing the results.

So here you go. In all of 2013, 5,862 properties changed hands (about a quarter of metro Vancouver’s volume).

Buyers who lived locally already: 74.92%
Buyers from elsewhere in BC: 13.77%
Buyers from elsewhere in Canada: 9.67%
Total buyers who live in Canada: 98.36%

Total buyers from outside Canada: 1.64%

Hmm. Okay, this is not a set of data for Vancouver. But a reasonable person has to wonder how much greater the number of foreign buyers would be in Van. Twice? Four times? Even if it were ten times, that would mean almost 90% of total sales were made to people living locally, or from somewhere else in the province or the nation.

So I’ll say it again: while there’s a vast and growing population of Asian heritage in the Lower Mainland and pockets of metro Van especially, the influence of HAM (hot Asian money – from Asia, not Burnaby) is grossly overstated. Houses cost a stupid amount of money because buyers capitulate and pay it – then hobble their lives with tenants living in the basement or the garage. Restricting property ownership won’t bring down real estate values, but it sure will dump all over Vancouver’s efforts to be a hub of Pacific commerce. And HAM will move to Seattle. Lose-lose.

(BTW, if the hicks in Victoria who count on their fingers and toes can cough up stats like this, why can’t the metrosexual realtor rock stars in Vancouver do the same? Would it blow this marketing fraud wide open? Just asking.)

***

In 1975 the CN tower was erected and the beaver made Canada’s national rodent. Trudeau was prime minister and the top song (briefly, thank God) was ‘Rhinestone Cowboy’. If you worked in a dead-end job, you made the minimum wage – about $2.70. Expressed in today’s dollars, that was $10.13 an hour.

Actually, Stats Canada says the average minimum wage across Canada today is almost the same – $10.14. Meanwhile the average Toronto house in 1975 cost $57,581. Expressed in today’s dollars, that equals $216,248. However, the average property is now selling for more than twice that – $549,174, with detached 416 houses averaging $870,000.

So what? So, more evidence real estate values bear absolutely no relation to the ability of people to afford them. A minimum-wage earner might never afford a city house, but incomes in general have also fallen far behind the property curve.

Don’t worry. Things will revert.

269 comments ↓

#1 renters rule on 07.16.14 at 4:35 pm

hey Garth! wow, early post today – you on vacation too?!
canadian economy pooched, inflation rising. rock, meet hard place.
I have no debt and a nest egg. thank gawd. things are getting uglier and uglier… :-o

#2 Mark on 07.16.14 at 4:38 pm

$900B of CMHC subprime mortgage insurance is entirely the culprit here. Not Asians. Not people from mysterious far away places like Persia. A simple subprime credit bubble, of which most of the Realtor community (and even CMHC itself) is in complete denial of.

It is completely not normal that a subprime mortgage guarantor, the CMHC, has managed to corner $900B worth of the $1.1T market in mortgages. Anyone who writes an expose or even an analysis of such, and fails to consider the profoundly deflationary impact of such when the bubble finally pops, really shouldn’t be trusted as being serious. Even BoC Gov. Poloz is starting to come around to the idea that the BoC is behind the curve in implementing accommodative policy. RE price declines are just minor to date, but as they pick up steam, its not hard to see why such will be required.

#3 APM on 07.16.14 at 4:39 pm

HAM is just an excuse. Easy money is what inflates prices.

#4 Question? on 07.16.14 at 4:40 pm

Can an asian posting anti-HAM comments be a racist?

So, refrain from using the R word.

I see HAM in my backyard.

#5 renters rule on 07.16.14 at 4:41 pm

haha, oh and by the way, I have seen that car parked outside the Shangri-la on Alberni Street. Should have taken the dude’s picture and emailed it to the chinese goverment…and let them have at it!! haha ;-)

#6 Bill C on 07.16.14 at 4:42 pm

Every asset returns to the mean. Dark days ahead for some folks in this country I think.

#7 DreamingInTechnicolour on 07.16.14 at 4:42 pm

Demographics and crime will likely determine where many people choose to live as we all get older. Will they stay where they are or cash out and move to a smaller community and pocket a lot of money from moving out of the GTA, GVA or GCA.

#8 Remembering on 07.16.14 at 4:45 pm

Canada has a truly shameful record of racism: the treatment of the Native Peoples (in particular the residential schools), Sikhs (Komagata Maru), the Chinese (poll tax), and the Japanese (internment during WWII and the wholesale theft of their property).

And now, we still, without shame or any shred of moral decency, seek to castigate the Chinese once again. We really should be ashamed of ourselves. How can we continue to be a people of such narrow mindedness. It would not at all surprise me that the fatuous, shallow, lazy, and shallow intellect that would accept such a racist argument is one that also cannot understand the stupidity of its other beliefs, including a ruinous obsession with real estate.

Garth is to be commended for his outspokenness.

#9 MissisaugatoVancouver on 07.16.14 at 4:53 pm

Get your facts straight G. UBC professor David Ley, who wrote the book on the subject, Millionaire Migrants (2010). Ley found a ridiculously close +0.94 correlation between foreign migration to Vancouver and property prices over a 25-year period.

In the past eight years, more than 36,000 rich migrants moved to B.C. under the now-defunct millionaire migration scheme, which allowed people into Canada after handing over $800,000 as a no-interest loan to the government.

Raw immigration data shows that in 2010 alone (the year Canada started clamping down on the scheme), there were 27,535 applications for millionaire visas for B.C. alone, 65 per cent of Canada’s total. Of these applicants, 92 per cent were Chinese.

http://www.vancouversun.com/life/Opinion+Recognizing+foreign+buyers+drive+Vancouver+real+estate+prices+racism/9907365/story.html

Wow. 36,000 people over eight years in a population of 4,620,000. You must be scared. — Garth

#10 bob on 07.16.14 at 4:57 pm

Garth – what we REALLY want to know is how much a 1% drop in demand will affect prices.

So, if that 1.64% purchases in Victoria did not occur, how much would that have decreased prices?

And as you have noted many times, it’s all location, location, location — so if a particular neighborhood within Vancouver is a hotspot for foreign money, you could see things like neighborhood #1 = 71% foreign, and neighborhood #2-10 1%… your Vancouver average would still be 8%.

And we anecdotally saw this — properties in Vancouver west would jump double digits, and people scratched their heads, so then all the locals bought houses in East Vancouver. Then those people get displaced and buy in Burnaby, etc.

#11 Smartalox on 07.16.14 at 5:00 pm

One of the central tenets of the myth of foreign investors is that these buyers pay CASH.

If they truly were buying properties en masse,
– CMHC would not be teetering on the edge of its debt limits
– Canadians would not be continuously warned about record personal and household debt levels
– Canadians’ home equity levels would not be swirling around historic lows, and at levels below what they were when US real estate imploded.

For what it’s worth, nobody that I know, who overextended themselves buying homes in the last 10 years, fit the description of HAM, yet the (absurdly over inflated) prices that each household paid surely were reflected in sale price statistics.

#12 Mean Gene on 07.16.14 at 5:00 pm

A little clarity goes a long way.

#13 jan truman on 07.16.14 at 5:05 pm

Well I have a friend who is of Asian decent and is third generation Canadian, Vancouver to be specific. She doesn’t speak any language besides English and hates rice. She is in sales and had to transferred to Victoria because it was stressful selling to the HAM in Vancouver. They were all confused as to why she didn’t speak Mandarin and actually didn’t trust her. I also have a HAM neighbour (who has become Canadian now) who told me in 2010 to start buying real estate and that she needed to buy two more houses because the the rest of China was coming. This Neighbours day job was to do the paperwork and help investment immigrants get to Canada from China. She bought two houses in West Vancouver. Then in 2011 she was crying because the government drastically reduced the number of investment immigrants that could buy their way to Canada so effectively she was out of a job. Then her real estate agent told her that the house market was down 10%, A few months later she was happy again and told me that she was buying houses for her friends that had to stay in China. They would just come and visit then buy or just send her the money. They must have been using the unannounced government program through the Bank of China to get their money out of the country. I live here and I see a lot of really rich, new to Canada, Chinese. The realtors should be down playing this Ham thing. If the government restricts it then they will loose out as well. But lots of Agents will speak openly about HAM

#14 Michael on 07.16.14 at 5:09 pm

Very little HAM in Victoria and prices there have been very weak. Lots of HAM in Vancouver and prices keep going up. Guess it’s just a coincidence….

BTW, you shouldn’t be adjusting incomes to inflation, you should adjust for GDP-per-capita. If incomes only went up with inflation, living standards would never improve.

Go ahead. — Garth

#15 Brian Ripley on 07.16.14 at 5:22 pm

VANCOUVER 2011 CENSUS (Population 603,502)
http://www12.statcan.gc.ca/nhs-enm/2011/dp-pd/prof/details/page.cfm?Lang=E&Geo1=CSD&Code1=5915022&Data=Count&SearchText=Vancouver&SearchType=Begins&SearchPR=01&A1=Religion&B1=All&Custom=&TABID=1

MOTHER TONGUE SPOKEN
Cantonese, Chinese & Mandarin: 22% of population
Japanese, Korean, Vietnamese: 4% of population

SPOKEN AT HOME
Cantonese, Chinese & Mandarin: 16% of population
Japanese, Korean, Vietnamese: 3% of population

Vancouver Real Estate Chart:
http://www.chpc.biz/vancouver-housing.html

It’s not the language a person speaks that pushes prices higher or lower. It’s an underlying bet that inflation is going to produce personal wealth. Mr Poloz etal are not at all worried about inflation. As Garth points out at the top of this post: “Actually, Stats Canada says the average minimum wage across Canada today is almost the same – $10.14. (as 1975)”

Brian: Similar stats for Toronto, please. — Garth

#16 Michael on 07.16.14 at 5:25 pm

Ask and you shall receive! Adjusted for GDP-per-capita, the minimum wage should be about $17.50. That’s why the middle class is screwed and corporate profits are through the roof…

#17 Fleabitten Monkey on 07.16.14 at 5:27 pm

Understanding the hypothesis is that local buyers in Van make up the vast majority of purchases/sales I think there is a missing component here given the percentage of average income it takes to afford a home/condo whatever in Van/lower mainland. If its upwards of 70% how is financing being obtained? This has been questioned before, but I have never seen a real answer. Oh the bank of mom and dad, they say. Oh the BC Marijuana Industry, they say. What about locals who are the beneficiaries of income earned abroad, be it Asia or Europe or wherever? Can anyone really say for sure? Something is supporting this and I’d love to know what.

#18 stop lying on 07.16.14 at 5:29 pm

This example just reinforces that HAM exists. No HAM in Victoria and less than half the average house price. If you want to prove HAM has no effect, find a place where we all *think* HAM likes to buy with similar lousy home prices. I imagine you will not find such a place.

More on yesterdays bond talk, today BoC revises down all of its economic predictions for Canada, USA, world… yes even China… these low rates have a ways to go yet…

For the 53rd time: the central bank does not set fixed mortgage rates. — Garth

#19 Timmy on 07.16.14 at 5:31 pm

Either you are delusional or you are trying not to offend the Chinese. Victoria is WASP land–whitebread, the exact opposite of Vancouver. There are very few Chinese in Victoria because there is no shopping there.

OMG. — Garth

#20 Frustrated Kiwi on 07.16.14 at 5:31 pm

The simple fix is for Canada (and NZ) to adopt Australia’s rule – offshore money can only invest in new builds, not existing residential property. It hasn’t cooled their housing market much (which lends weight to Garth’s thesis) but it sure helps with perception. If offshore money wants to build new condos and leave them empty then no problem, it’s just adding to the construction industry, but what it can’t do is speculate on existing properties – perhaps pushing the locals out. I personally see absolutely no benefit in allowing off-shore $ to park in residential property but investing in new builds or commercial enterprises – sure.

We have a free country, and most would like that to remain. Walls don’t work. — Garth

#21 ILoveCharts on 07.16.14 at 5:33 pm

Garth Garth Garth.. Have you even been to the West Coast? A comparison of foreign ownership in Victoria to Vancouver is as silly as a comparison of Toronto to Pickle Lake.

HAM is not the only factor but it does make a
contribution. Come visit my condo building and you will see first hand. And yes, I know the difference between someone who has Asian genes and someone who has Asian money.

This isn’t about racism. I’ve got nothing against these people.

I am West often, actually. I’ll also bet most of the people milling around in your condo building live there. Like you do. — Garth

#22 randman on 07.16.14 at 5:44 pm

Something is wrong out there in the banking world…

Germany also authorizes bail ins

http://www.moneyeconomics.com/headlines/germanys-forces-creditors-to-support-failing-banks-under-an-approved-plan/

On Wednesday, Germany’s cabinet approved plans to force creditors into supporting struggling banks in 2015. The new bail-in rules are part of a package of German legislation on the European banking union. The European bank union is a project that centralizes bank supervision in the euro-zone. Germany will apply these rules already from next year, according to the bill. Struggling bank creditors will have to support financial institutions, covering a maximum of 8% of liabilities, before the banks can use Germany’s financial markets stabilization fund SoFFin. Bankers have mentioned that extending SoFFin is a sign that the government wants to guarantee that Germany’s regional public-sector lenders “would have a last resort should the stress test unveil a capital shortfall.”

Read into it what you like…you have been warned

#23 Freedom First on 07.16.14 at 5:47 pm

Nice example with Victoria, Garth. And love your last sentence. Worry is a waste of time, while thinking is fun and pays tremendous dividends. Even a drunk Smoking Man can see that.

Garth, to be honest, I don’t understand what immigration has to do with my personal financial management principles anyways. Mind you, I accept full responsibility for my decisions and actions, and I know that blame and self-pity are of no value. Best I focus only on what I am doing. Helps me keep in mind that my freedom always comes first.

#24 ILoveCharts on 07.16.14 at 5:54 pm

I am West often, actually. I’ll also bet most of the people milling around in your condo building live there. Like you do. — Garth

They do and they are great people. Many appear to be here as students. Lots of young folks driving BMWs, Mercedes, etc. Lots of folks wearing clothes from China that you simply can’t buy in Canada. I met a realtor in the elevator once who told me that she was selling a unit that had been bought by parents for a student. It’s all anecdotal but I’m quite confident that the units in this building could not have been sold (at least not at this price,) if it weren’t for HAM.

In that respect, HAM is great. It kept people employed during the construction of the building. It increased the number of living units in the lower mainland, etc.

It seems like a lot of people that talk about HAM are also a bit racist but that is just coincidence and they don’t always go hand in hand. I have nothing against the people and I find it offensive when we can’t have a discussion in this country about inflows and outflows of money without someone trying to label us as being racist. Money has no race.

#25 Alistair on 07.16.14 at 5:58 pm

Vancouver realtors cannot cough up the stats? Or don’t want to? A few local realtors freaked when the immigrant investor program was ended.

It does not matter whether it is Asians or Albertans. Residential housing should be for residents. Residences should not be treated as a resource to be sold out from under the people who live and make their money here. Many places in Europe have that figured out already. Maybe in a hundred years or so we will re-learn to make laws in the interest of the vast majority of people who live here.

You want to live here? Everybody is welcome. Want to buy a residence here? Prove you reside here.

I would like to see a graph of percent sales to non-residents (any origin) versus cost of the home. Non-residents buying here for equity I think buy the more expensive items, and leave the small boxes for the locals.

#26 };-) aka Devil's Advocate on 07.16.14 at 5:59 pm

I kinda prefer your previous comment on the whole HAM thing: “What difference does it make”.

The bottom line is the market is doing what it’s doing. And yes, eventually, SHIFT happens. But my hat is off to you Garth for seeing the Cloud in the Silver Lining in any particular scenerio.

Make hay while the sun’s shining folks because most certainly SHIFT happens.

};-)

“Our main business is not to see what lies dimly at a distance but to do what lies clearly at hand.” – Thomas Carlyle.

#27 ILoveCharts on 07.16.14 at 6:00 pm

One question for Garth: Do you deny the impact ofr HAM across the entire world (Australia, London, Singapore, etc.) or just in Canada?

You really hate the Chinese, I guess. — Garth

#28 Shawn on 07.16.14 at 6:09 pm

Disingenuous?

Actually, Stats Canada says the average minimum wage across Canada today is almost the same – $10.14. Meanwhile the average Toronto house in 1975 cost $57,581. Expressed in today’s dollars, that equals $216,248. However, the average property is now selling for more than twice that – $549,174, with detached 416 houses averaging $870,000.

******************************************

Is it disingenuous to mention that fact while omitting the fact that interest rates are well less than half what they were in 1975?

Affordability is based on the monthly payment compared to income.

#29 Son of Ponzi on 07.16.14 at 6:10 pm

Victoria probably not a good example.
Even Chinatown looks British, and the Empress Hotel only serves English tea.

#30 Montellino on 07.16.14 at 6:13 pm

The problem with HAM is that I read these posts on the way home from work and all this HAM talk makes me veeerryyy hungry. Then I get home where my significant other has a “new kale diet soup”… bummer

But hey to stay on topic – everyone should realize thay we have two markets.. just like we have to economies (Alberta vs everyone)… rich foreigners will buy and often compete in million dollar properties.. these hones cost a lot for a reason. Forest hill will never be cheap with or without them. But what this isnt an excuse for is 10 yahoos bidding 600k in rexdale… stupid..

#31 Seth Perry on 07.16.14 at 6:15 pm

What about average incomes? I don’t think the average minimum wage earner is buying a home today, but what about the average family income adjusted for inflation or GDP-per-capita? Are we paying more for homes today?

Thanks for the post Garth.

#32 Shawn on 07.16.14 at 6:15 pm

Heard it all before…

I have been following house prices to some degree or other since about 1974 when relatives of mine sold a house for $12 k and built a big ranch style house for about $30k. I recall they paid $1,500 for the lot from the municipality.

Over all all those years there was rarely (if ever) a time that houses were not thought to be unaffordable. Rents too.

Even when prices dropped they were considered unaffordable by vast numbers of people.

Meanwhile houses got bought and paid for.

Now maybe today they are truly unaffordable. But with low interest rates and lots of sales and lots of new construction, someone is affording them.

And no, debt and CMHC were not invented yesterday. That was part of how houses were bought for over 50 years now.

People having been dooming and glooming about excess debt for literally hundreds of years. Get over it!

#33 Smoking Man on 07.16.14 at 6:16 pm

Unlike, chicken shit, live with in your means, Canadians.

Not only are Chinese smart, they have balls they take risks, gamble…

They don’t through their lot in GICs, they invest.. The prosper.

I sence a lot of envy out here post land…

Learn from them, stop bitching and blaming your
guiltlessness on an easy target.

#34 High Plains Drifter on 07.16.14 at 6:18 pm

I got Canada written over me early and for many yrs. I figured my last years would be covered by a government invitee with means. Call it a well off Johnny come lately. That is the way this country worked for the working class but maybe Canada is all grown up. You know, no social mobility, fixed class structure, political correct, social engineering run rampant, and now no real estate lottery. The thing is, in my country, I do not ask the experts. I hope you folks in Toronto are having a nice beer drinking summer, now don’t you go letting yourselves drink it warm like some of us lowbrows are used to.

#35 raisemyrent on 07.16.14 at 6:19 pm

oh, gee. the humanity.
picture a building with 50 units. The realtors pump it, and 10 units go to HAM. Let’s assume that they buy the units first, and then the realtors can prey on the middle-class “Canadian” sods lining up on the street. Still with me?
So, when Joe Blow (or Jane, but let’s use Joe) comes to his buying moment, and the realtor says the units in this building sold to HAM etc a similar unit is x amount of dollars… wouldn’t you think he’d walk away? Who’s forcing him to pay? Moreover, who’s forcing him to commit himself to a mortgage and whatever terms and to think that it is a sound financial decision? It’s all in his mind.

Don’t you guys get it? A few HAM purchases do not a bubble make! It’s the masses that do stupid things.

He should take responsibility for his actions and if paradigms, fear, and perhaps prejudices influenced his decisions, then so be it. But don’t blame it on someone else.

That’s like saying that you got a C because of all those damn students that got an A (in a class that is curved). Nope, you got a C because you’re riding the middle of the curve. Deal with it.

oh my, that just reminded me; I went to school in AB, and there were similar accusations. Those asian students getting the As and making us get Cs. Sigh…

#36 Mark on 07.16.14 at 6:23 pm

“Do you deny the impact of HAM across the entire world (Australia, London, Singapore, etc.) or just in Canada?”

Those places you name have extremely high amounts of leverage. One thing we can say about many Asians (as well as many Canadians not of Asian descent) is that they’re willing to leverage to buy RE. This makes such “HAD” (Hot Asian Debtors), not “HAM” since they’re not actually bringing money to the table.

#37 Aggregator on 07.16.14 at 6:26 pm

$900B of CMHC subprime mortgage insurance is entirely the culprit here. Not Asians. Not people from mysterious far away places like Persia.

Nobody questions what caused the run up in prices. Everyone knows CMHC is the culprit. The question is what policies are/will the government and banks use to sustain prices or avoid a crash that would take down the banking system as noted by IMF.

The last few years has been mainly driven by access to MBS guarantees, which is now crashing. CMHC and Genworth are near IIF capacity and households are up their neck in debt. Something has to be done to offset contracting demand for private credit, and if that means helping Chinese wire money with multiple Canadian bank accounts to skirt the PBOC's $50,000 rule (which is illegal anyway way it's done), then they'll do it because the consequences of inaction are far worse.

Even if it is 1.63%.. as a sample size.. add that to a conservative assumption (#175) on immigrant buyers and you have an 8% market share nationally being driven by foreigners and immigrants. And that is NET inflows, i.e., buyers who don't sell a home to buy another, thus, taking up more supply and adding net value dollar volume.

That means when year-on-year dollar volume and price gains are averaging 6-8%, ex domestic residential mortgage credit growth (4%), implies 2-4% growth could be entirely driven by foreigners and immigrants. And it's not HELOCs either as OSFI data showed a declined of 0.3% yy in May. Where's the money coming from?

The Ogden v. CIBC case revealed everything. CIBC knew wiring more then $50,000 in any manner is illegal according to PBOC's own laws (I checked). Yet they did it anyway because they are not obligated to Chinese law.

The fact that these reports are global and not isolated to Canada (why else post Canadian homes priced in yuan on Juwai and VanFun?), makes the trend more credible then some local RE board's stats.

You can deny it all you want Garth. This issue isn't going away and will keep raising concerns.

#38 Mark on 07.16.14 at 6:28 pm

” It’s an underlying bet that inflation is going to produce personal wealth.”

Inflation destroys the value of RE, and if “Asians” were looking to protect their money from inflation, there are investments that historically do far better at that. The argument that Vancouver RE may very well be pricing in a future gold stock bubble is one that’s been made. I even made it in the RFD forums. However, if one believes that, why not just buy the actual stocks themselves instead of locking one’s money up in a relatively illiquid asset class that can very easily lose a dramatic amount of value very quickly.

#39 Eh? on 07.16.14 at 6:29 pm

A very strange comparison using Victoria data to try to extrapolate Vancouver data, regarding HAM.

Victoria is very anglo and nobody is suggesting mainland China is trying to buy it all up.

A complete apples to oranges comparison and of little, if any, value.

Show us your data. — Garth

#40 vanrant on 07.16.14 at 6:35 pm

Sorry to disagree with you on this one. Hams do not like going to a city where they can not get good Dim Sum. They would pay more to live in Vancouver for a lifestyle similar to their home.

#41 Sheane Wallace on 07.16.14 at 6:42 pm

#26 ILoveCharts

Impact of HAM on London? Have you been to London lately? No? thought so.
————————————-
If rich HAM want to buy in Vancouver let them buy, but stop CHMC ‘insurance’ for all deals in Vancouver.
—————————-
Mark, There would be no deflation, they could attempt to inflate sufficiently to ‘minimize’ losses, but no deflation would happen as it would bankrupt government AND banks.

It bothers my mind how CMHC could be legal , it is a crown corporation, right? Can we let the queen deal with that? She surely has a lot of gold left as I am hearing…

Poloz is clueless, any hedge fund manager will do much better job.

#42 Sheane Wallace on 07.16.14 at 6:48 pm

It bothers my mind as well how each of the newly coming ‘leaders’ in power is actually far more stupid than the previous one.

Can we please elect Rob Ford, hit the bottom and start moving up from there.

On second thought: Rob actually has certain intellectual capacity and appeal. So we can start moving up immediately! Just a thought.

#43 Londoner on 07.16.14 at 6:49 pm

I think most people understand that the majority of real estate purchased in Vancouver and Toronto is transacted by Canadians but that doesn’t mean foreign investment hasn’t played a hand in escalating house prices. And it isn’t just wealthy Chinese that do it. Around the world money is invested in real estate as a store of wealth. Are you denying that Canadian cities are attracting such investment?

#44 gut check on 07.16.14 at 6:57 pm

I don’t know about the rest of you but I am REALLY FED UP with Garth’s accusations of racism to anyone and everyone who questions the reality they see around them.

Calling someone a racist, or implying that they are closet racist, is just.. it’s not on. Not cool. Childish, foolish, lazy and yet STILL an effective tactic, which is why he’s using it. He’s certainly not using it because he knows he’s right – he can’t know that – so it’s all about shutting down debate and creating a chilling effect.

Boycott the blog for a month. You know you can do it. No commenting. At all.

We’ll see if this makes it past the censor. I’ve learned that the word boycott is the most dangerous, hated word on the internet.

BOYCOTT THE BLOG for a month if you’re sick of being called a racist.

Great idea. I’m in. — Garth

#45 Frustrated Kiwi on 07.16.14 at 6:57 pm

Garth, you say “walls don’t work”. But Canada doesn’t allow unlimited immigration and foreign investments of “significant size” must be shown to benefit Canada before they are allowed – so aren’t there already walls? I fail to see the benefit to Canada (or NZ) in allowing foreign investment/speculation in existing residential property. Sure prices will eventually revert to the mean, but it can hurt a lot of people getting there. And if the perception of HAM has added fuel to the market then that’s another strong negative there. BTW, I also suspect Australia would still consider itself a “free country” despite this one investment rule.

#46 kILlaBoY50 on 07.16.14 at 7:03 pm

When will they revert??

#47 Garth Turner's Peruvian Daughter on 07.16.14 at 7:03 pm

Querido Padre Garth,

I agree with you completely about all this silly racism.

If you will only take a few minutes to take that pequeno little DNA test, I can get my papers and come to Canada. I will stay in PEI with my cousin and never bother you if that is your wishes.

My mother (you remember her, no?) has done very well, so I will be bringing some HAM with me when I come.

(Hot Andean Money)

Mucho Gusto, Papa!

#48 Guy Willoughby on 07.16.14 at 7:04 pm

The numbers speak for it self. Scapegoating is a traditional way of diverting blame. The present circumstances of low interest rates and quantitative easing has caused many asset bubbles through out the market place. Housing is just one aspect of this.

To make up for wages under performing compared to inflation, the government extended mortgage terms to 40 years and no down payment caused the housing price to inflate to unnatural levels.

With companies moving their operations off shore, unemployment is going up. The tax base has been reduced. Thus government debt will increase.

The United States is in terrible shape due to this. Why we are following their model is beyond me.

It is absolutely amazing that the housing bubble hasn’t popped the way it did in the US and many European countries.

Stop blaming the Asians and take a look at what we are doing and make the appropriate changes!

#49 David on 07.16.14 at 7:05 pm

‘Loose’ and ‘lose’ are two different words. Lose an ‘o’. I have yet to see anyone actually mean to write the former.

We’re getting as bad the CBC.ca comments section.

#50 mark on 07.16.14 at 7:13 pm

“The simple fix is for Canada (and NZ) to adopt Australia’s rule – offshore money can only invest in new builds, not existing residential property.”

That’s not even a thing, dude. It’s not policed. And it’s kind of weird when Australian realtors are running websites to sell existing property that can only be accessed from Asian IP addresses.

#51 MissisaugatoVancouver on 07.16.14 at 7:13 pm

Vancouver ranks 22nd in Canadian cities for median income, which is less than seventy thousand. We have the highest real estate prices in Canada, and ridiculous prices on the west side with an average house price in excess of 2 million.

If these homes are being purchased by locals, apparently there are special lending policies that allow people in Vancouver to borrow many times more money than any other market in Canada. Discounting the possibility that local people have some kind of special access to insane levels of leverage and CMHC insurance, the money is coming from somewhere – it has to be outside money.

#52 Mike T. on 07.16.14 at 7:19 pm

#42 gut check on 07.16.14 at 6:57

I support your idea for all people, rightly or wrongly, accused of the R word to boycott the blog for a month

you folks are tedious

#53 Mixed Bag on 07.16.14 at 7:21 pm

Good to have actual numbers to work with, even if they are for Victoria and not Vancouver.

Shawn is correct, it’s the buyers who set the price. If people freak out that they’re going to be priced out and pay more, lest someone else pay even more… well …

#54 Chickenlittle on 07.16.14 at 7:23 pm

#8 Remembering:

As long as there are people,there will be racism. Racism isn’t just a North American problem. There are racists all over the world.

Don’t forget: immigration is still a huge social experiment. Never in the history of the world has there been a country(s) that welcome so many new faces each and every year. We have never lived all together before. There used to such a thing as borders and those are being erased.

People just need time.

#55 Dee on 07.16.14 at 7:28 pm

I commend you for this post, Garth. Both calling a spade a spade (racism/xenophobia) and for highlighting that report on wages today.

One thing I’d add that I didn’t see in a brief scan of comments: not all of that 1.64% “buyer lives outside the country” is necessarily Asian investors. At least a few of those properties went to Americans moving here to be residents, or old British folks looking for a nice retirement home, or…

I’m sure some large portion of that 1.64% is foreign investors. And so what? I hold US REIT ETFs in my portfolio. And while a lot of that is commercial, some is residential/apartment buildings.

I sure hope none of the people whining about HAM hold vacation homes in Arizona or Florida.

#56 solonghongcouver on 07.16.14 at 7:31 pm

You’re wrong, Garth. I lived in Van for many years as a realtor and I personally saw many “questionable” transactions involving HAM. We’re talking cash transactions from suspected embezellers and mid rank govt officials (via proxy, naturally). We’re talking empty houses but a kid and a limbo. And we’re talking sales to each other at increasing amounts because nothing washes dirty money faster. Stats? No way. The reality is far scarier and dirtier than the stories and lays open the entire van west and Richmond area to the truth: a jobless, pathetic economy, with real estate values built on a money laundering scheme and government corruption.

#57 ILoveCharts on 07.16.14 at 7:31 pm

You really hate the Chinese, I guess. — Garth

Does that explain why I married an Asian woman?

I don’t know if I can make it any more clear. I love Chinese people AND I think that inflows of money from China are having an impact on the local real estate market. It’s not the only driver for sure but it is a contributing factor.

My opinion on the impact of cash from China does not make me a racist.

Nor did I say so. But asking the impact of Chinese money in various countries suggests you have an issue with those folks. — Garth

#58 Catalyst on 07.16.14 at 7:33 pm

You calling people racist for saying what they are seeing is quite pathetic.

It isn’t racist to say Brampton is mainly South Asian (india/pakistan/srilanka) or Markham is mainly Chinease.

Their ethnicity isn’t the question, its the perception that since an AVERAGE Canadian cannot afford an AVERAGE residence than there is the perception that there is something not above par occurring. Money laundering, offshore investors etc.

Now, who did I call a racist? — Garth

#59 Bob Rice on 07.16.14 at 7:34 pm

“…the average Toronto house in 1975 cost $57,581. Expressed in today’s dollars, that equals $216,248. However, the average property is now selling for more than twice that – $549,174…”

In 1975, there were VERY few condos or towns. If you lived in one, you were probably a renter. So most of those homes were single detached – believe me I remember growing up in that era and pretty much everyone lived in a detached home and some semis in the old city – that means that we are pretty much comparing a single detached then ($216K) to a SDH today ($900K). So a factory worker was able to buy a SDH with a decent size yard… amazing…

#60 pinstripe on 07.16.14 at 7:36 pm

Apparently the GDP for BC-Bud is equivalent to either the BC forest industry or BC mining industry.

What happens to all the revenue generated from BC-Bud? How much of this money is for purchasing houses/condos?

#61 Smartalox on 07.16.14 at 7:48 pm

It’s interesting, but up until now I don’t think that it can be said that the myth of the HAM has formed the basis of housing policy in Canada. Immigration policy? Yes, certainly, but I don’t think that there is any (factual) evidence to date to say that HAM played a role in changes made to mortgage rules and CMHC, that led to the gasbagging of real estate prices in Canada.

VanGregor’s proposed policy would be among the first, a dubious distinction, intended to net some much-needed votes in Vancouver’s next civic election.

#62 Not en economist on 07.16.14 at 7:49 pm

“We have a free country, and most would like that to remain. Walls don’t work. — Garth”

You break my heart Garth. If you still defer to ideology, you might as well still be working for Harper.

We may have a free country, but it’s still a country. We’re not open to whoever, whenever, to do whatever. We have a sovereign nation and we answer to noone but ourselves. If citizens of other nations are interfering in our internal affairs to a degree we find problematic, we have every legal and moral right to make changes to the privileges we extend to them.

Having said all of that, from a practical point of view I really don’t give a sh*t if we do or do not place limits on foreign real estate ownership, because it’s not problematic in the aggregate, only in certain local areas. If some Canadians feel an entitlement to live in “Kits” or whatever, then they need to cough up millions or live somewhere else. Even not counting foreigners, we can’t all live in “Kits”.

#63 AisA on 07.16.14 at 7:49 pm

Hi gang,

My name is ‘A is A’ and I’m a Crash-o-holic.

I used to be angry and blame others for making it difficult to buy home in this country. Now I realize that if they continue doing what they are doing, I will probably be able to buy a decent home for 75k to 150K when all is said and done. More power to you bubble, I hope you get puffed up so much that when you finally pop, no one will hear you in outer space. If it takes another year or two or three, God bless you bubble and all the opportunity you will provide for those that wait you out.

Take as long as you need my frothy leviathan friend, whatever it takes to help me say the magic words “I bought my home with cash”. In the meantime, yes, I will pay my dirt cheap rent and wait.

Should you forsake me completely Mr. Bubble – whose shadow encompasses all other lesser bubbles… I will sleep safe in the knowledge that by not buying for the rest of the years of my life I will have lost, nothing at least not in this country. You are too great my friend, too great indeed for an insect like me to be able to expand you further.

#64 Tony on 07.16.14 at 7:51 pm

The problem is when the builders raise their price a sane person would size it up and normally would not pay it so the price would fall. Today we have the generation Y most of them haven’t a clue and the Chinese and people from Hong Kong who grossly overpay because they only buy high. The person with a brain would move, leave the country or rent if the rent is a fair amount.

#65 Smartalox on 07.16.14 at 7:52 pm

By the way, wasn’t the recent elimination of the immigrant investor program going to stem the flow of HAM, and cause real estate prices in Vancouver to crater?

Yet if the REBGV press releases are to be believed, sales and prices have never been higher!

So if HAM is declining, why are prices still rising?

#66 Extron on 07.16.14 at 7:54 pm

Re gut check

I’ll boycott the blog, but can I just check in everyday to make sure I’m not making any comments.

#67 Smartalox on 07.16.14 at 7:56 pm

@51 Pinstripe:

If you’ve ever been to a condo sales office, and wondered how so many units could be sold within moments of opening, you might have your answer.

These pre-build condo assignments are then eventually re-sold for profits, or at the very least, clean cash – though some are used as ‘stash houses’, or are ‘rented’ to business associates.

#68 young & foolish on 07.16.14 at 7:59 pm

“Inflation destroys the value of RE”

is this true?

#69 Retired Boomer - WI on 07.16.14 at 8:08 pm

Reversion to the Mean. Yeah, Stocks and Real Estate.
Sometimes it takes a while for this to take place, but rest assured it always does.
Would you but the market, or a stock at 20 times earnings? Probably not, but some might based on growth.
Would you buy Real Estate at 20 times your earnings?

There are times when I should have sold a stock whose price ran well above their earning, when I did not, I usually suffered reversion to the mean.

Artificially changing the game with limiting mortgage insurance, terms, interest, or anything limiting the open marketplace usually benefits one side at the expense of the other.

Limiting your DEBT load is never a bad idea, especially when you get close to that retirement line.

Buyer’s Remorse will be the subject of this blog before too long. Won’t matter if it was Chicken, Beef, or HAM either.

#70 Fleabitten Monkey on 07.16.14 at 8:10 pm

#49 MissaugatoVan,
Precisely. How is it the banks can extend financing in Van given the avg income stats as compared to prices? Where is the money coming from? Certainly an avg income family doesn’t have the dwnpymt offset the purchase price and arrive at a mortgage amount that passes underwriting by the financial institutions. The availability of “easy credit” at low rates does not pass the smell test here as to the rationale.

#71 Keith on 07.16.14 at 8:11 pm

T & T Supermarket, catering to the Asian market, with locations in Greater Vancouver, Edmonton, Calgary, Greater Toronto and Ottawa – no location in Victoria, or Montreal.

Aberdeen mall in Richmond B.C. – squarely aimed at the Asian market – no such mall in Victoria.

Garth, Victoria and Vancouver don’t compare well. There are no studies in Vancouver that prove HAM – also none that definitively rule it out. Housing affordability is the seminal issue in Vancouver, yet no civic government has defined the influence (or lack) of foreign money as has been done in other jurisdictions.

I provided numbers. You talked about grocery stores. — Garth

#72 Mark on 07.16.14 at 8:11 pm

“So if HAM is declining, why are prices still rising?”

RE prices aren’t rising and haven’t been rising for the past year or so. But what has changed is the sales mix, with the low-end largely dropping out because first-time buyers are simply priced out of the market and CMHC subprime credit is increasingly less available.

So Realtors who are only transacting in the higher-end segment of the market will obviously advertise that the ‘averages’ are higher, but what they don’t accentuate is how dramatic the shift in the sales mix has been to achieve such a shift in the median.


“Inflation destroys the value of RE”

is this true?

Absolutely, for two reasons. Inflation makes buying day-to-day goods and services more expensive, leaving less in a paycheque to go against RE and debt service. Also, the same inflation causes the cost of capital to rise as lenders demand a substantial risk premium for lending their money. In extremis, hyperinflation, RE prices collapse almost to nothing as the entirety of one’s income is consumed on day-to-day consumables and credit markets collapse.

For instance, in Weimar Germany’s hyperinflation, an entire apartment block could be purchased for a mere ounce of gold.

#73 young & foolish on 07.16.14 at 8:22 pm

“I will probably be able to buy a decent home for 75k to 150K when all is said and done” ….

There you have it, the irrepressible love of RE. So many salivating on the sidelines, waiting to buy, envious of the ones who bought for less before them! So few regarding it as little more than shelter.

#74 joe calgary on 07.16.14 at 8:28 pm

Garth you are simply misinformed. I work at a exotic car dealership and have Chinese students on student visa’s coming in to pick out cars upwards of $150000 which their industrialist parents pay cash for from China. These same kids are purchasing condo’s and houses to live in while they are here, always expensive addresses. Also exporting lots of vehicles back to China to buyers which ask for specific specification. This countries immigration policies have skewed real estate, recognizing this is not racism. Its ignoring this fact by politicians thats doing a disservice to Canadians, and by Canadians I mean actual Canadians not Chinese ppl that bought citizenship.

#75 Millenial on 07.16.14 at 8:29 pm

Hey Garth,

My brother (the physician) just bought a Kia. It’s pretty nice.

What do you think about that?

#76 };-) aka Devil's Advocate on 07.16.14 at 8:34 pm

“Trust me. I’d rather break my other leg than revisit this topic. Alas, we must.” – Garth

Still think so? Not your typical pack of Dawgs. Me thinks them to be more Westerners than your usual Eastern kennel.

#77 dd on 07.16.14 at 8:36 pm

I am West often, actually. I’ll also bet most of the people milling around in your condo building live there. Like you do. — Garth

You mean how canada sells citizenship, en masse, to people from china?
Glad ur here to back them up garth. Buy canadian citizenship cheap cheap and be assured u have garth turner, and other politicos, to beat down everyone else and accuse them of racism.

#78 liquidincalgary on 07.16.14 at 8:39 pm

wow garth,

i grew up in a small SK town and have never heard this many shrill voices in my life.

i was taught empathy and tolerance.

never have i heard so much hair-splitting by a bunch of whiners, just to prove an invalid point, regarding HAM.

i will not boycott this blog. it is invaluable. not just for the financial advice, but also the lessons you teach about having an open mind, even if we don’t like hearing what you have to say.

one small cog in the silent majority.

thanks for all you do, Garth.

#79 X on 07.16.14 at 8:40 pm

As the US gets closer to raising rates, the bond market is going to push rates higher. I am sure our leaders will try to talk down our dollar, but rates are going higher.

Also, I am sure the RE cartels do know how many foreigners are buying homes. But having people not know, currently works in their favour. Were the gov’t to ponder increasing the property taxes of HAM, I am sure that the RE boards would suddenly show stats similar to what Garth mentioned, to show foreign money isn’t that substantial, so no reason to push foreign money elsewhere. Canada wide, HAM is a small %.

Although what do you expect from a self serving association in an unregulated sector, where more people have more wealth that ever before.

#80 Mike on 07.16.14 at 8:43 pm

That $216k is almost bang on with the average price of housing in the US now I think. Hmmmm

#81 Freedom First on 07.16.14 at 8:45 pm

#42

Great idea. I’m in. -Garth

Best reply ever:)

#82 bill on 07.16.14 at 8:45 pm

Great post tonight Garth.
#8 Remembering on 07.16.14 at 4:45 pm
well said .

#83 Entrepreneur on 07.16.14 at 8:46 pm

#24 Alistair…Wonder why the government ended the immigration investor program? “Many places in Europe have that figured out already.”

Government sometimes give one reason for shutting down a program but really have another reason but will not tell us.

We grow up in Victoria…mosaic groups but everyone spoke fluent English. Can’t compare Victoria to Vancouver: Victoria is on an island and no one, not even our relatives from the prairies, want to catch the ferry.
(Now, everyone avoids the ferries unless have to… another topic.)

Vancouver real estate agents will have to collect the proper data for who is buying and how. The facts please and only the facts. On the other hand, not the real estate agent but another group that is not so bias.

#84 Frustrated Kiwi on 07.16.14 at 8:54 pm

#48 mark
Just because a law is broken doesn’t mean it’s a bad law. However, I would agree it is unlikely to make much difference, except in perception. But what I fail to see is what possible benefit there is to allowing foreign investment in used residential property (whereas there is clearly some to allowing multi-millionaires build new mansions, which would be allowed). Free trade in goods (which I support) is rather different to free trade in houses, which can’t be moved overseas. If no one speculated in real estate – it was all based on price to rent investment ratios, then there wouldn’t be much of an issue, but it would be naive to pretend that much residential investment is not speculative in nature. Given the world $ available for such speculation, relative to the population of some areas, offshore speculation can indeed move markets (London, England is an obvious example), which seems undesirable for the local population.

#85 Diggstown on 07.16.14 at 9:02 pm

Garth: Houses cost a stupid amount of money because buyers capitulate and pay it – then hobble their lives with tenants living in the basement or the garage.

The above is what I believe to be true.

My parents moved here in 1966 from Winnipeg and couldn’t afford a home downtown then. They bought in the burbs because that is what they could afford.

#86 TurnerNation on 07.16.14 at 9:09 pm

For the Rolls Royce set at his King St. W. office. I’d not go, feels icky. Free food & booze though…

Brad J Lamb @BradJLamb · Jul 15
This Saturday, 12-4pm. #KingWestBlockParty [email protected] http://instagram.com/p/qe2qoKiBES/

#87 Fred on 07.16.14 at 9:13 pm

I love it when the R word is tossed out by the thought police, it’s the new McCarthyism here in Canada. One makes a comment like Smoking Man did (#32) and another can say that his generalization is racist, yet his point was a compliment. The paradox. What great times we live in. HAM is for “asian”, people originating from a geographical region, so when one make the conclusion of “Chinese” when another says “HAM”, who now is the racist? ….I can hear the sirens.

#88 Uh Oh Canada on 07.16.14 at 9:16 pm

What Garth doesn’t understand is that there are no numbers supporting HAM because the gov’t turns a blind eye on this. What else do you expect from a city with no real economy? The money comes from selling the weather, mountains and marijuana to outsiders. And the municipal gov’t sure loves those property taxes on blown out evaluations.

That being said, I left Vancouver in 2004 when the bubble started. It was all my non-ham friends and acquaintances that we’re buying, fearing that they would be bought out.

Nothing is ever singular. The sky high real estate is a combination of many factors, including the two mentioned above.

#89 };-) aka Devil's Advocate on 07.16.14 at 9:16 pm

@ #69

I provided numbers. You talked about grocery stores. — Garth

“Don’t let your education get in the way of your learning.” – Samuel Clemens

#90 Mark on 07.16.14 at 9:25 pm

” work at a exotic car dealership and have Chinese students on student visa’s coming in to pick out cars upwards of $150000 which their industrialist parents pay cash for from China. These same kids are purchasing condo’s and houses to live in while they are here, always expensive addresses.”

And there’s a few Canadian kids who do the same overseas. You wouldn’t believe how much Canadian wealth I came across in Costa Rica when I spent a bunch of time there (apparently a favourite place for Liberal party senators to buy condos!).

But the facts are, as Garth has pointed out, a relative few rich people is not enough to shift an entire market. The evidence is clear that an explosion of CMHC subprime credit taken out by Canadians has moved the market to its extremes. Not a few members of the ‘rich’ crowd worldwide buying.

#91 Mark on 07.16.14 at 9:29 pm

“And it’s kind of weird when Australian realtors are running websites to sell existing property that can only be accessed from Asian IP addresses.”

Nonsense. There is no way of reliably segregating content by IP addresses, and no Australian Realtor would shirk their fiduciary duty to their clients by deliberately limiting the scope of their advertising. Such a claim is a complete and unwarranted attack on the professionalism of Australia’s Realtors.

#92 valleyrenter on 07.16.14 at 9:38 pm

Had to poke the hornets’ nest again, eh Gartho. Probably would have been easier to have an Amazon tie you up and give you the leg treatment à la Misery and call it a night.

#93 Franco on 07.16.14 at 9:41 pm

Some people are just plain nuts or worse. It’s sad to see this blog that has supplied a lot of info turn out to be a place where some people actually believe that a good chunk of the homes are bought buy foreign money than by Canadian citizens. I live in in PTBO and housing is hot here and no HAM money here. Let’s face it Canadian real estate is up in Canada and Canadian citizens are doing most of the buying.

#94 Derek R on 07.16.14 at 9:42 pm

#44 kILlaBoY50 on 07.16.14 at 7:03 pm asked:
When will they revert??

When Canada reverts to the taxation policies of the 1950s, 60s and 70s.

#95 James on 07.16.14 at 9:50 pm

Dear Garth,

You should put a voting mechanism in to give weight to these comments, like Reddit. You wont feel so bad about the racists and xenophobes, and we can move off this stale topic already! As a software developer, I’d be happy to help you find a technical solution.

#96 ozy - do the math on 07.16.14 at 9:52 pm

Wow. 36,000 people over eight years in a population of 4,620,000. You must be scared. — Garth

—> yeah? so how many houses were for sale in 8 years? Do the math. Listings\Immigration

Only a blind can’t see: immigrants bought the majority of houses in GTA in last decade.

Let me guess. You read that on the Internet. — Garth

#97 NFN_NLN on 07.16.14 at 9:52 pm

#38 Mark on 07.16.14 at 6:28 pm
However, if one believes that, why not just buy the actual stocks themselves instead of locking one’s money up in a relatively illiquid asset class that can very easily lose a dramatic amount of value very quickly.

Leverage. It is more difficult to get a 0% or 5% down stock worth $800,000.

#98 SHELTER THE MONEY NOT THE PEOPLE on 07.16.14 at 9:56 pm

#46 Guy Willoughby on 07.16.14 at 7:04 pm
Good Post.

IMHO I would weight the blame for the re bubble as follows.
97% of all Canada’s RE bubble due to Federal Gov. House pumping policies. CMHC and Interest rate manipulation.
Interest Manipulation is the THEFT of money from Savers and a GIFT to Borrowers.
The Gov needed to win the last election so they took the low road.
Anyway Locally (VAN. and TO.) HOT MONEY (I like to call it HOT money because it comes from many places in the world than just Asia) is a larger factor than it is in other parts of Canada.
It only takes one extra buyer bidding on a property to make a bidding war.
The sin here is that we have turned our residences into commodities to be traded like pork bellies.
Our RE market should be sacred and kept as cheap as possible so people can Buy AND Sell efficiently.
Instead we see clearly it has been manipulated for Political Gain. How Sad.
I remember living in Hong Kong in the 80’s and the HK Gov was under HOT Money attack. They were trying to Guard against currency manipulation saying Hot money is making a run against the HK$. They also boasted the amount of reserves they had as a WAR chest to fight off the invaders.
HOT money is real for every nation and all commodities.

#99 juno on 07.16.14 at 10:00 pm

#24 Alistair on 07.16.14 at 5:58 pm

Vancouver realtors cannot cough up the stats? Or don’t want to? A few local realtors freaked when the immigrant investor program was ended.

==============
The stats are there, just have to correlate them between the Land Titles / Ministry of Finance / and the banks.

Just put it this way, almost all houses are bought with a loan. The loan has to come from some bank. The banks should have the person residency and their employment income info. (rev can). So basically its that easy, I’ve seen the files before, if government wanted to they can have it generated .

It may not be exact, but pretty damn close. And give us a flavor on what is actually going on out there.

On the if they bought with straight Cash, you can bundle all that into a pile name houses which did not need a loan. Although Its a grey area, but I bet that figure is extremely low.

Basically what the commoners don’t know will keep them guessing. Keeping the controllers in control.
And in power

#100 Mark on 07.16.14 at 10:01 pm

“Leverage. It is more difficult to get a 0% or 5% down stock worth $800,000.”

Which goes back to what has been said all along, its the subprime credit coming from the CMHC, not rich people looking for inflation protection, driving the market to such extremes.

#101 Sheane Wallace on 07.16.14 at 10:06 pm

#63 AisA

Not really, You could be making 20 % more than now, all the prices – food, gas could triple and that house could be worth north of 500 k even with a real decline in house prices and a housing crash.

You see, when a bubble pops all the derivatives related to it pop, including the currency. Unless there is bankruptcy and default.

Whoever is running this scheme is trying to squeeze the hell out of everyone and get a gigantic piece of the remaining pie at any cost and invest it somewhere else, the fact that this is happening simultaneously IN CERTAIN COUNTRIES ONLY shows that it is orchestrated.
Go and try to get that mortgage in Europe or any BRICS country, or anywhere on earth except US, UK, Canada, … hey the usual suspects.

So when they are done with us they will be really done, there would be nothing else left to milk, only liabilities.

#102 Mark on 07.16.14 at 10:06 pm

“Only a blind can’t see: immigrants bought the majority of houses in GTA in last decade.”

I don’t think anyone disputes that. The only controversy is whether these houses are being bought with significant amounts of money brought from overseas (sometimes called “HAM”), or being purchased with oodles of CMHC subprime credit.

Evidence of money coming into Canada from its immigrants is scant. With most arriving with, at best, enough for an apartment rental deposit and funds sufficient to buy a used Honda for the family.

#103 juno on 07.16.14 at 10:08 pm

post 96:

http://creastats.crea.ca/natl/index.htm

Based on Crea Stats, approxiately 42,000 houses sold per month X 12 month/year X 8 year

= 4032000 house sold in 8 years.

4032000/ 36000 = 112 house per month (in canada)
or .892 percent. less than 1 percent which matches victoria’s figures

#104 edmontonian on 07.16.14 at 10:15 pm

Main stream media FINALLY picks up on housing market cooling… LOL https://ca.finance.yahoo.com/news/housing-market-cooled-most-canada-090000277.html

#105 Sheane Wallace on 07.16.14 at 10:19 pm

There were different ways to control the economy:
outsourcing was actually corporate and government policy in the last decade or two,

and instead of tax cuts these housing ponzi was implemented in a way that benefited mostly banks and real estate developers at the expense of the taxpayers and savers, the latest (real estate developers) are mostly privately owned old money.

Real estate agents are mostly disposable slack, they are the one making noise and feasting with the remains on the table but even people like B. Lamb are low level players and jokes.

#106 Smoking Man on 07.16.14 at 10:19 pm

We are all encouraged to follow a script, get an education,work hard, follow the rules.. Behave and fit in.

Not sure what made me snap, get off that train 20 years ago.

The uncertainty of forest gumping through life.

All the rocket scientist on here, confident they have all the answers, masters of the yellow highlighter…

I love the uncertainty of no plan…

I love it…

#107 Keen Reader on 07.16.14 at 10:21 pm

Big thanks to Garth! I just retired today at age 48, leaving the military with a “modest” pension (as he recently defined!). His great advice over the last 15 years or so (various blogs, 2020, Money Road) have allowed my wife and I to grow a sizeable portfolio of balanced and diversified investments. Also, we have gladly been renting in the last few years, saving many headaches and better profiting from the latest bull market.

Our retirement income will now easily exceed our current paycheques. Since we prioritize what we DO over what we HAVE, this cashflow will be more than enough for our wide bucket list. Although we may decide to work again for fun and to keep making worthwhile contributions, having this freedom is totally priceless. Again, thank you very much Sir!

Guy

#108 Pat on 07.16.14 at 10:24 pm

http://www.theglobeandmail.com/news/british-columbia/scant-evidence-behind-myth-of-vancouver-real-estates-foreign-buyers/article9000860/

Foreign buyers is .2% of all lower mainland real estate transactions. What’s funnier is the data is in the article where a realtor was making his staff pose as buyers from HK.

Perception…. all the data in the world doesn’t matter anymore.

#109 SHELTER THE MONEY NOT THE PEOPLE on 07.16.14 at 10:28 pm

#91 Mark on 07.16.14 at 9:29 pm

Actually Mark you would be surprised at how strong the firewall is Between China and the rest of the world.
There is a lot you cannot access from China and vice versa. They are good at their job of controlling what is seen on the internet there.
If you Host in China in Chinese language it is not generally accessible to the outside world unless they want it to be.
If you are traveling in China and want to access western sites that are banned like You Tube, you will need to use a VPN to encrypt the files so they will cross their firewall.

#110 mikek on 07.16.14 at 10:29 pm

Weird experience today. Found myself at the concourse level of Aura – an absolutely towering new condo at Yonge and Gerrard. Only 4 of the restaurants in the food court have been leased so far. Each one of them a sushi bar. That’s just… Weird. Heaven for somebody I suppose.

#111 to_be_frank on 07.16.14 at 10:31 pm

The world is overcrowded and wants very badly to move here. Until it is no longer more desirable to come here than to leave there, relentless population growth will underpin a secular rise in demand for housing and farmland in Canada. That will put a rising floor under house prices, even though a near-term correction in some localities is highly probable and overdue.

#112 joblo on 07.16.14 at 10:34 pm

don’t care who you are, where you came from.
DEMOGRAPHICS & INCOME levels suggest…..
Multi generational households & micro boxes.
get used to it.

#113 Basil Fawlty on 07.16.14 at 10:34 pm

The demographics in Victoria, or anywhere outside the Lower Mainland of BC, are a poor comparable. No where in the Province is like Vancouver for the concentration of people not born in Canada.

I don’t understand Garths argument and why he so quickly labels commenters as “racist”, or “hater”. calling them “haters”.

Canada allows over 200,000 immigrants annually. Of course, this is going to affect real estate prices.

This argument is a joke to most anyone that lives in Vancouver. I present Garths argument to people here and they just laugh. Does one need statistics to prove that the sun is hot? It’s obvious Garth , get over it.

The BC Real Estate Association estimates total offshore sales in the Lower Mainland amount to 2%. Similar to Victoria numbers. I would welcome yours. — Garth

#114 Yuus bin Haad on 07.16.14 at 10:41 pm

#44 gut check

If Garth’s in, I’m in too – starting …

NOW!

#115 Brian Ripley on 07.16.14 at 10:43 pm

re: “Brian: Similar stats for Toronto, please. — Garth” (Post #15)

2011 CENSUS TORONTO (Population 2,576,025)
http://www12.statcan.gc.ca/nhs-enm/2011/dp-pd/prof/details/page.cfm?Lang=E&Geo1=CSD&Code1=3520005&Data=Count&SearchText=Toronto&SearchType=Begins&SearchPR=01&A1=Ethnic%20origin&B1=All&Custom=&TABID=1

TORONTO ETHNIC ORIGIN
China = 12% of population
Filipines = 5% of population
Japan+Korea+Vietnam = 4% of population

REVISION TO EARLIER VANCOUVER POST ABOVE (Post #15)
2011 CENSUS VANCOUVER (Population 2,280,695)
http://www12.statcan.gc.ca/nhs-enm/2011/dp-pd/prof/details/page.cfm?Lang=E&Geo1=CD&Code1=5915&Data=Count&SearchText=Greater%20Vancouver&SearchType=Begins&SearchPR=01&A1=Ethnic%20origin&B1=All&Custom=&TABID=1

VANCOUVER ETHNIC ORIGIN
China = 19% of population
Filipines = 5% of population
Japan + Korean+ Vietnam = 5% of population

These data above should be more reliable than my first attempt at Vancouver ethnic background at Post #15
I have now used the same search criteria for both Vancouver and Toronto in this current post.

Stats Can 2011 data show that ethnically, Chinese are 12% of Toronto and 19% of Vancouver populations. Makes sense to me, Vancouver is the major Pacific port of entry.

Here is my chart comparing Vancouver and Toronto Housing:
http://www.chpc.biz/compare-toronto–vancouver.html

#116 Happy Renting on 07.16.14 at 10:51 pm

There is less focus on this point, but it is worrying that the percentage of workers earning minimum wage is growing (comparing to the same collection of data from 1975.) It wouldn’t surprise me if the percent of workers earning near minimum wage is also higher now.

The rise of the low-paid service industry job and the decline of well-paying manufacturing jobs increases the struggle of workers trying to stay in the middle class (no shelter or food insecurity, basics covered plus a little leftover to save and pay for a little entertainment.) It’s a recipe for social unrest. Debt cannot subsidize lifestyle forever, something has to give and when it does it will be very painful. It’s like we’re a generation behind in investing in R&D and increasing the technological skill set of our workforce. Nothing more advanced has replaced the activity of manufacturing stuff that can be made cheaper offshore. And that is being covered up by reliance on RE and related industries producing jobs.

When RE corrects I hope it at least draws attention to the need for diversified industry and value-added employment. It surprised the heck out of me to learn RE and related were so much bigger than oil and gas.

#117 Flawed on 07.16.14 at 10:53 pm

#71 Keith on 07.16.14 at 8:11 pm
T & T Supermarket, catering to the Asian market, with locations in Greater Vancouver, Edmonton, Calgary, Greater Toronto and Ottawa – no location in Victoria, or Montreal.

Aberdeen mall in Richmond B.C. – squarely aimed at the Asian market – no such mall in Victoria.

Garth, Victoria and Vancouver don’t compare well. There are no studies in Vancouver that prove HAM – also none that definitively rule it out. Housing affordability is the seminal issue in Vancouver, yet no civic government has defined the influence (or lack) of foreign money as has been done in other jurisdictions.

I provided numbers. You talked about grocery stores. — Garth

***************************

No you cherry picked to try to disprove corruptive distorted markets by all involved. Good thing most of us have eyes that still work.

#118 Flawed on 07.16.14 at 10:55 pm

The BC Real Estate Association estimates total offshore sales in the Lower Mainland amount to 2%. Similar to Victoria numbers. I would welcome yours. — Garth

***********************************

So today they are right, yesterday bcra is full of it. Please make up your mind.

As I said to others, I welcome all data. Imperfect or not, it beats what you have provided. — Garth

#119 gut check on 07.16.14 at 11:02 pm

“#91 Mark on 07.16.14 at 9:29 pm
“’And it’s kind of weird when Australian realtors are running websites to sell existing property that can only be accessed from Asian IP addresses.’

Nonsense. There is no way of reliably segregating content by IP addresses,”

Really? REALLY? You really believe that?
Go and try to watch something from the BBC. Go ahead. Tell me if you can watch it without paying for and downloading a program to hide your location.

#120 gut check on 07.16.14 at 11:03 pm

BOYCOTT THE BLOG. ONE MONTH.
SHOW GARTH YOU”RE NOT GOING TO PUT UP WITH IT.
Show the whole friggin’ country the power of the people.

Can we burn some bras, too? — Garth

#121 Jonno on 07.16.14 at 11:05 pm

One of your most objective and well written articles. Thanks Garth.

#122 JustTryingToProtectEquity on 07.16.14 at 11:05 pm

How are you doing Mr. Turner?

You’ve helped make me a very wealthy man, through the selling of my home and the investing of the proceeds.

I never have to work again.

Every now and again, I come back to read your blog. It
must disappoint you to see it spiraling into this cesspool of racism and misinformation.

But you’re handling it well, good sir.

Thank you for all you do.

#123 TO Renter on 07.16.14 at 11:07 pm

Makes me think of the recreation property, bought from the crown in the 1950s, and all the property tax assessments and FMV assessments for ownership transfer carefully documented in a folder – now there’s a hockey stick. If I look at the list of owners conveniently put out by the cottager’s association, barely a non-WASP name on the list.

So who drove Muskoka prices up to the stratosphere making cottages unaffordable to will, gift or transfer (capital gains) and too expensive to carry (property tax) for long-time ‘average’ families? People were angry, and suspicious of the “new money/no manners” crowd, there’s been tears and shouting, but at least they couldn’t be called racist. Still ‘us’ vs ‘them’, but it wss like looking in a mirror except for the fatness of wallets.

If you think houses are illiquid, try exiting from a property tied up in emotional memories of multiple generations with partial ownerships.

People somehow find a way to always disparage money unless its their own – ? We all feel entitled to not be priced out I guess.

#124 HAM starter home? (so the kids have a place to study after school) on 07.16.14 at 11:09 pm

A Vancouver realtor is really hoping the old adage “location, location, location” will convince someone to buy her newest listing: a $25.8-million teardown.

The uninhabited 1937 home has boards nailed over its windows and doors so it’s impossible to say what the 3,700-square-foot dwelling looks like inside. Someone has also sprayed graffiti on its white exterior walls.

Sitting on more than an acre in the city’s exclusive Point Grey neighbourhood, the property has 150 feet of unobstructed ocean frontage and spectacular views of the Pacific Ocean, North Shore mountains and downtown Vancouver.

more:
http://bc.ctvnews.ca/for-sale-25m-boarded-up-teardown-in-vancouver-1.1916823

From Belmont Avenue, UBC is so close you’ll hardly get the Ferrari up to 3rd gear before you’re parked again & on your way to classes.

BTW: one of your neighbours is “LuLuLemon” Chris and his recently finished monstrosity.

Looking at Google Maps showing the new monster homes around it, I wouldn’t be surprised to see someone buy it to expand their property.

#125 VanIsle Retiree on 07.16.14 at 11:11 pm

To MississaugatoVancouver (I have spelled Mississauga correctly, to help you out next time) – You quoted Dr. Ley’s book by saying that he reported a correlation of 0.94 between foreign migration to Vancouver and housing prices there. I expect there would be a similar correlation between the number of firefighters called out to a fire and the extent of damage in the fire. There are lots of excellent examples to indicate that correlation does not imply causation. Now, can we think of any other reasons why there might be such a strong correlation between housing prices and foreign migration, something that might be the real causal factor???

#126 gut check on 07.16.14 at 11:14 pm

“The BC Real Estate Association estimates total offshore sales in the Lower Mainland amount to 2%. Similar to Victoria numbers. I would welcome yours. — Garth”

so now we trust them?

#127 Bob Rice on 07.16.14 at 11:15 pm

Smoking Man: “Not only are Chinese smart, they have balls they take risks, gamble…”

Smartest and most accurate thing you’ve ever stated…

Not only the Chinese… many immigrant groups over the years have prospered and done better than white Canadians.. Look at the Italians from the 50s onward… Indians and Chinese are stepping in now as the more recent arrivals who have largely prospered in Canada, and there are many other groups who have done so as well..

#128 the R on 07.16.14 at 11:15 pm

C’mon – Victoria — really ?

Does it, or 4 that sake is there even an airport on that lump of dirt ?

How many flights to ham land -? exactly ! !

#129 Nomad on 07.16.14 at 11:16 pm

We were in Los Angeles in 2008 when the economy took a dump in its pants. My boss had just bought a 780k house. His wife’s parents had lent them some money. Soon after he tells me his house is worth 720k (mind you, I don’t know how he determined that). Then one morning he came to work in a panic saying he couldn’t take cash out of the Wachovia bank ATM he normally used. Coworkers were crying blood.

I was unaffected. Having been a saver for 10 years, I went to a car dealer and bought my first car cash. The dealer said he had never seen this (well that explains your economy). I thought it was pretty nice that Sony and EA stocks hit $16 and that my dividend fund went down 50% but still paid 4%. Since I was renting and had the cash flow, I put a few tens of thousands of dollars in those three things. You can guess how that worked out. No debt equals opportunities (that you must take).

I suddenly got nostalgic for LA. After all, there’s sunshine, the US dollar is strong and houses I heard are more affordable. I took a peek at real-estate using a website called “Trulia”. Wow. You can buy a house near the beach for the price of a Toronto semi-detached tird in a location where you’d have to pay me to live in. And salaries are 10% higher.

#130 R on 07.16.14 at 11:21 pm

Generations in a season of want.

I’m the child of boomers, but I got over my sense of entitlement long ago, realizing that a McMansion and a Lexus are not due to me simply for being born in the 70s.

#131 Chinese man on 07.16.14 at 11:23 pm

Garth et Al

First off, as my name implies I’m CHINESE. Gasp!!

Secondly I am not racist. At least not against my own race…can’t say the same for my feelings about the apeish white man…

Thirdly I also subscribe to the idea of HAM. I don’t think that automatically makes me a racist. I do believe in the STRONG influence of Chinese money. Do I have hard data? No sorry I don’t but let me share some of my rationale:

1. I work for a developer as a construction project manager and I can tell you that in my current building ~80% was bought by brothers from another mother. Whether they were mainland chinese brothers or frozen land (the great north strong and free…) brothers I don’t know but I think it makes little difference since the vast majority of us get down payments from the bank of dad or mom…who also don’t have declared incomes here in Canada since they work abroad. I know it sounds like a stereotype but there’s good reason for stereotypes. Hey I’m Chinese and I’ll fess up to it.

2 Chinese people LOVE real estate. The white man cannot comprehend this fact. That’s because in HK the primary means for the government to tax citizens is thru land restrictions and land taxes. Personal income taxes are much lower but virtually all the land is controlled by the government and sold off to developers for exorbitant fees which are then passed off to the common folk. Real estate does appear much cheaper to the Asian brother here in Canada. So do bimmers and benzes for that matter…

3 before you go rushing off to beat my Asian brother at a pre construction line up, I can tell u NEW CONSTRUCTION CONDO sales in Toronto have plummeted dramatically in the last year and a half. Some say 50% in the papers but it could be a bit more. I myself am a first time buyer and altho I could easily afford to buy I WILL NOT. I do believe house prices are set to gradually come down and that burying yourself in a mortgage is pretty surefire way to financial ruin.

So from my end I think the truth us halfway between here and there. At the end of the day it’s about risk and return. Don’t go bonkers over a house – take out a mortgage you can afford and diversify yourself in other investments. If you find a cheaper place by renting than by all means go ahead! Especially if it’s condo. Free holds the only real way to make money in real estate in my opinion.

Peace out homies. By the way I was kidding about the white man thing. I love yall.

#132 AACI Home-dog on 07.16.14 at 11:30 pm

Damn privacy of info acts…that is the culprit ! Limited real stats.

#133 Sheane Wallace on 07.16.14 at 11:37 pm

Interesting read from another former government official…

http://www.paulcraigroberts.org/2014/07/16/insider-trading-financial-terrorism-comex/

#134 Inglorious Investor on 07.16.14 at 11:43 pm

#68 young & foolish on 07.16.14 at 7:59 pm

“‘Inflation destroys the value of RE’ is this true?”

No

#135 Financial Freedom at 40 on 07.16.14 at 11:47 pm

RE #115

The Stats Can Note 35 says survey respondents can list more than one ethnic origin. So the total counts of origins well exceeds the population count. I could list 6 ethnicities to capture all the great great great… grandparents, being a Canadian mutt.

Toronto may well have 12% of people listing Chinese as an ethnic origin, but that gives so sense for whether they are HAM and recent millionaire immigrants, or their ancestors arrived in 1878 with nothing and built the CP Railway.

#136 mishuko on 07.16.14 at 11:53 pm

I cracked… had to raid it. Pulled a smoking man and said F-it. It’s like a second wife, at first it was a bit rough but then now it’s just a few bumps and everyone gets along. You know a big boy’s toy. Who needs property? Atleast it’ll come along if I need to tally-hoe!

I think this whole race discussion is so awkward. Hey wait, what about other races? Like isn’t there Hot Brown Money? Hot Black Money? How Purple Money(dwellers holding their breath)?

I call them the ‘rich’. Doesn’t matter how they self identify. Money is money. Money talks.

#137 Carpe Diem on 07.16.14 at 11:57 pm

#115 Brian Ripley

Hi Brian,

Love Plunge-o-meter!

I took a look at the site. I think it would be worthwhile to look at the total for the metropolitan area versus the proper city itself.

Example. There are more Asians from India than China in Metro Toronto. Metro Vancouver, there are most from China than India. Both these countries of origins trump other Asian countries.

Thanks for the site. It’s going to be my entertainment for the rest of the evening!

#138 Inglorious Investor on 07.17.14 at 12:00 am

#116 Happy Renting on 07.16.14 at 10:51 pm

“Nothing more advanced has replaced the activity of manufacturing stuff that can be made cheaper offshore.”

This may be true in Canada perhaps, but elsewhere manufacturing is going high-tech, even––or especially––in China. Check out how GM makes cars in China, or see what FoxConn is doing lately.

In a past comment I opined that the so-called ‘manufacturing renaissance’ taking place in the US would not resurrect the big unionized assembly line hoards of the last century. Manufacturing is going lean and high-tech with much less reliance on human labor. Hopefully some of the lost jobs that required human hands can be replaced by work that requires more of the human mind.

#139 devore on 07.17.14 at 12:03 am

#4 Question?

Can an asian posting anti-HAM comments be a racist?

So, refrain from using the R word.

“racism, intolerance, xenophobia and simple hating”

Pick your poison. Racism is just a special case of intolerance and hating.

You can’t hide behind a label.

#140 Keith in Calgary on 07.17.14 at 12:05 am

How many of the “buyers who lived locally” were shell companies incorporated and registered in Victoria and elsewhere solely for the specific purpose of facilitating entry into the immigrant investor program. They set them up as RE investment companies and plow the money to “buy the passports” into a house (the capital nvestment) for their “employees” (read newly arrived family members) to potentially live in, or not.

Nothing wrong with that, I’ve exploited loopholes as big as an Airbus A380 myself before……..but to say those stats make your argument Garth is hardly justified………for the stats themselves are open to manipulation or misinterpretation due to lack of clarity.

#141 VanDammeCouver on 07.17.14 at 12:08 am

The photo for this blog post was taken by yours truly, yesterday outside of Park place in downtown Vancouver.

I suspect that no one cares, but I’m glad I was able to contribute in some way!

#142 Inglorious Investor on 07.17.14 at 12:11 am

A lot of evidence is anecdotal, but when you keep hearing it from those in the RE business, you know it’s having an effect. Keep hearing from contacts in the RE business about the foreign buyers (not just Chinese) looking for a safe haven to store/hide/launder offshore cash by buying up properties in North America. No, there may not be stats worthy of inclusion in an economics text book, but those in the biz see what’s going on.

No, it’s not the whole story, but as they say, it only takes two individuals at the margins––a buyer and a seller––to set the new price.

#143 Cici on 07.17.14 at 12:18 am

#48 Guy Willoughby

Thank you for the lucid and thoughtful post. Refreshing!

#144 Lost on 07.17.14 at 12:26 am

So a couple of years ago we were going to some open houses in north van looking to see what’s available for town houses in the 450k to 650k range.
I quote one of the realtors….”don’t even bother with a low ball offer, there are bus loads of Chinese coming and they are going to snap the place up in no time”.
I know…..just anecdotal….

#145 KommyKim on 07.17.14 at 12:27 am

RE: #19 Timmy on 07.16.14 at 5:31 pm
There are very few Chinese in Victoria because there is no shopping there.

I guess there are no shops in Chinatown then:
http://virtualvacationguide.com/guide.php?setpanorama=42
http://virtualvacationguide.com/guide.php?setpanorama=506

#146 FOOLS on 07.17.14 at 12:29 am

Who seriously believes that stats Canada is telling the truth about the immigrant numbers?

Oh, & markets aren’t rigged,………yeah right.

Everybody enjoying the papered over fake recovery?!

Spend, spend, spend!

#147 fisheman on 07.17.14 at 12:29 am

The whole B.C. Bud industry is done ,finished,kaput . Well maybe a few hardcores supplying the local scene but the glory days are gone. I tied up alongside an old rumrunner who told tales of running 200 miles off the U.S.,drifting off Ensanada while being unloaded, then into town for the vegies & girls. We’ll be the same. My what glory days they were too. Up till 9/11 just mega tons going across the 49th & Jaun de Fuca. Every hippy single mother made their Xmas money trimming. All the off grid growers got their winters down south. Then the hydroponics & cloning just exploded. All gone , finito; just the tales of the big hits, close calls, excitement of living on the edge & making it for 3 decades. As far as real estate, Mr tax man has woken up & net worthing fellows who own a house & haven’t shown any income for decades. Oops, got to sell the house! When the govt. catches on the party is way over.

#148 Happity on 07.17.14 at 12:35 am

Gullible you say?

How about a usa economic Rennaisance …

http://www.zerohedge.com/news/2014-07-16/q1-productivity-collapsed-most-over-60-years-goldman-fears-consequences

The news is so widespread on the catastrophic Q1 but peeps keep thinking the stock market is the only indicator to watch

#149 TakingResponsibility on 07.17.14 at 12:37 am

Well, well, well. I just finished reading “Undoing Border Imperialism” by Harsha Walia. Radical read! Very interesting that the very Radical Left and the Neo-liberal Right have sort-of similar thoughts regarding human geographical movement and a sort-of-similar call for ‘no borders’. Of course, capital and transnationals have had no borders for quite some time. I truly am finding myself questioning the belief in borders and states.

So odd, though, the similarities…there must be some subversiveness or co-optation going on…

I’m calling out the calling of ‘racist’ or ‘racism’ as a co-optation. Racism is and was systemically practiced in occupied Canada and is exemplified by security certificates, detaining for years without evidence or charges, police profiling, death, state surveillance, state terrorist lists, etc. – all real and really practiced here and now. State terrorism.

Hardly the same as the commenters here have the power to enact. Calling HAM or identifying newcomers as ‘wealthy home buyers/speculators’ is so NOT on the same level as the systemic state racism nor does it lead to death, rape, incarceration, lawless exceptionalism, etc.

(As an aside – ‘yellow peril’ is a term that was used – initially – by white men wanting to keep white women from the clutches of Asian men.)

Seriously…I’m wondering …. if racializing comments leads to racism or “xenophobia” then what do the numerous (benign?) sexist comments lead to? Misogyny? Simple hatred?

Really, there is no difference between old Settler Colonials and new Settler Colonials. Although the new settlers may be more uber.

And, while I get that Garth is merely trying to point out the emotional drunkenness that has pervaded housing consumption and that the perversities that accompany that emotional state can lead to wholehearted generalizing (re: ‘race’), he has fallen short in clearly marking who is benefiting from the movement (movement being the ‘ism’ of racism) – Realtors? Developers? Marketers? Politicians? The Racialized? Or the Racists? Who is losing?

Conundrums abound.

It is always best that we, the people, keep focused on Policies and Governance. Do not be distracted.

#150 k on 07.17.14 at 12:51 am

Hey Garth
Luv ya to bits……however being born and raised on the west side of Vancouver I must say there has occurred an economic Chinese invasion. This is not a racist comment. It is an observation, My highschool in 1974 had 10 “Chinese” New Canadian….Old … it doesn’t matter, Today that same highschool of 2000 students has about 10 white students and the rest are Chinese….Asian Chinese….new immigrants….medium immigrants…. I don’t care what you politically correctly want to call it…..it is a reversal…..a reality….. European white people are now subplanted …over run ..? Its just the truth and the way it is. Good bad or otherwise, West Side Vancouver has been colonized by very wealthy Chinese. If you think these are racist comments Garth….all you have to do is visit for a while, Keep up the good work !

#151 UVZ on 07.17.14 at 12:55 am

#37 Aggregator on 07.16.14 at 6:26 pm

“Nobody questions what caused the run up in prices. Everyone knows CMHC is the culprit. The question is what policies are/will the government and banks use to sustain prices or avoid a crash that would take down the banking system as noted by IMF.”

Not sure why think a crash would take down the banking system — as it is backstopped by the CMHC.

A crash would hit the government (because of its CMHC liabilities) and hit the economy (because of its abnormal reliance on a dysfunctional RE-based driving force).

#152 White Rhino on 07.17.14 at 12:55 am

It is quite obvious why data for buyers is available in Victoria and not Vancouver, The Van realtors do not want you to know the stats, while the Vic realtors do, because in Victoria, they are marketing to those who wish to avoid the so called Yellow peril. If people knew the true stats in Van, it would be just another headwind to ever higher prices. The problem with an insane bubble like you good folks Have in Canada, is the blame really lies with no one in particular. Some day this is going to end. And the further it goes, the more pain that will be spread around. I do not look at woulda , coulda , shouda, i have been in the construction industry all my life in the states, and i survived the worst mess of a generation , by the seat of my pants, and only because i stayed put the whole time and never bought into the money for nothing and chicks for free myme.
Best of luck to all of you.

#153 UVZ on 07.17.14 at 1:01 am

http://business.financialpost.com/2014/07/11/why-a-real-estate-correction-should-be-welcomed/

The media may be setting the stage for the public to welcome and accept a RE “correction”. Perception is reality. As long as most people rationalize it as okay, all will be well. Many arguments can be made to keep people calm and happy during a “correction” phase.

#154 Western Observer on 07.17.14 at 1:12 am

Garth – comparing Victoria to Vancouver re:Ham – pointless, irrelevant & misleading.

Calling the people that live here In Vancouver and see the effects of Ham “racist” – ignorant and the easy politically safe response.

Once again, this not about race but rather the fact that is does exist and you continue to discount it.

Isn’t it better to try to understand something than ignore it?

The world is shrinking , what applied in the past is irrelevant now, the game has changed.

#155 The Original Dave on 07.17.14 at 1:20 am

Mark……..

RE prices aren’t rising and haven’t been rising for the past year or so. But what has changed is the sales mix, with the low-end largely dropping out because first-time buyers are simply priced out of the market and CMHC subprime credit is increasingly less available.

So Realtors who are only transacting in the higher-end segment of the market will obviously advertise that the ‘averages’ are higher, but what they don’t accentuate is how dramatic the shift in the sales mix has been to achieve such a shift in the median.

————————

yeah, but isn’t this because there’s less inventory on the lower end? It’s like saying they’re not counting dwellings that are under $150,000. That’s easy because there are no dwellings under $150,000.

It’s complete insanity what’s going on, but it just seems that it has all shifted upwards in price (for now). Is there a segment that is trending downwards?

#156 too much debt on 07.17.14 at 1:30 am

#14 Michael

Very little HAM in Victoria and prices there have been very weak. Lots of HAM in Vancouver and prices keep going up. Guess it’s just a coincidence….

Michael…you are bang on. I live in Victoria and have to go to Richmond all the time for work. There is no HAM in Victoria and the real estate market is very soft. In Richmond I see sold out condo buildings that maybe have 30% of the units occupied. The River Green condo complex is a perfect example of one such development. Drive by on any given day or night and more than half the units are completely empty. They have been bought by HAM and sit empty. You can not compare the Vancouver and Victoria markets, they two completely different markets. Nice try Garth.

#157 West Coast on 07.17.14 at 1:38 am

Ever since the 70’s people have been thrilled on the west side of Vancouver when they have been able to sell their house for ‘top dollar’ to whomever.

Without a doubt there are enclaves in the city of Vancouver, UBC, Richmond etc. where many off shore investors have decided to buy. Often small, pokey, post war houses are replaced by substantial dwellings. I would say that in the last 15 years that many of the new houses on the westside are architecturally pleasing. This is contrast to the 80’s and 90’s when many very large, ugly houses were built.
Yes, in any ‘world class’ city (we like to think Vancouver is a world class city – but I think we are quite parochial) there will be people who invest in property but spend little time there. These people may or may not have numerous residences. They may in fact buy and sell houses to one another and who knows – maybe they compete for biggest and best.
We should also realize that we have incredible restrictions on land use. Vancouver from the air looks like a large park with a few clusters of high rises. This is highly unusual for a ‘major’ urban area.
Instead of clucking over who our new next door neighbours are in Vancouver we should ask why any of us are willing to over pay by 100,000’s for poorly built houses or condos that are guaranteed to ‘fail’ within 10 – 15 years.
In this city at this point in time, renting is the only sane answer for a working person. However, if you are looking for a nice family house to buy, then try the suburbs of Maple Ridge, Pitt Meadows, Surrey, Langley etc. By the way, people have been doing just that for the past 2 or 3 generations.

#158 Homeless in Canada on 07.17.14 at 1:40 am

Garth – Wow. 36,000 people over eight years in a population of 4,620,000. You must be scared. — Garth

That is is not 36000 people, that is 36000 millionaires! Big difference don’t you think? Plus their families. Thats likely over 100,000 people.
You lose all credibility when your speak on this topic. Its no wonder you were kicked out of Parliament, no one can TELL YOU anything.

FYI, I still like you posts and agree with most everything else you say!

Actually, it was 36,000 applications, which includes families. Yes, 2% of the population. — Garth

#159 screwed on 07.17.14 at 1:44 am

Since we’re talking about China, can we please talk about the crapload of shyte that we’re almost forced to buy “made in China”? I mean has anyone NOT gambled their life with a toaster from China yet? How about the coffee grinder or the coffee maker? How about tools, knifes or supposedly “stainless steel” cutlery?

“Made in China” is 99% crap. If possible, I will buy the alternative and have typically a fighting chance to be happy with the purchase. At least if the item is 100% not assembled in China or does not contain any parts that are made in China, I have a chance to live to see another day.

China’s manufacturing is pure crap. Their knockoffs are so blatanly bad, it’s a shame the knockoff police (does that exist?) cannot fight them all.

Buyer beware. Canadian consumers in particular. Go shopping in Europe and buy the real deal for the same price or less!

China is such a headache. BC is a beautiful place but that’s about to change unfortunately as new people bring new ways of life. All one has to do to imagine what this place will look like in a few years is travel to the place where most immigrants come from. It’s hard to believe their ancient ways will change just because they paid cash for a nice place a few thousand miles away.

Time to pack it in.

#160 Ronaldo on 07.17.14 at 1:48 am

”A minimum-wage earner might never afford a city house, but incomes in general have also fallen far behind the property curve.” Garth

Boy, is that ever true Garth and as an example the below is a townhouse I purchased in Dec. 69 in North Van. for $20800 with $3000 down which I borrowed from my mother until the deal went through after which I borrowed the same amount from the bank carrying the mortgage. Told them it was for furniture purchase and they said no problem. At the time my wage was $666 per month which was average for the time. Interest rate was 9 3/8%. PIT & condo fees came to $210/mo. or roughly 1/3 my monthly salary. Very affordable considering that the spouses income was not taken into account until a year or so later. I was 23 at the time.

Today that same exact unit sells for $495,000 with interest rates at around 3% or a third of what it was when I bought.

My wage in todays dollars would be around $4000/mo. or about 6 times more than in 1969. The price of the townhouse, however, has risen by 23.8 times.

Assuming the same down payment of 14.4% on todays price the amount of mortgage would be $423,700. At at interest rate of say $3% (a third of what it was in 69), the interest alone would be $12,700 and adding in principle, taxes and condo fee, say about $16,000 to carry or about $1350 per month. Again, roughly 1/3 of monthly income (single). Very affordable at that rate.

The question then, what would the value of that same unit be worth today if interest rates were at just 6%? My guess would be 70% of todays value. Below is the unit.

http://bonniemclean.ca/mylistings.html/details-36949694

#161 Son of Ponzi on 07.17.14 at 2:00 am

When I immigrated to Canada in 1977, Canada was a powerhouse, politically and economically.
Now it’s just a backwater, catering to the Middle Kingdom.

#162 debtified on 07.17.14 at 2:01 am

Garth, why do you punish yourself and continue to waste your time responding to these people who blame HAM for the state of the real estate in Vancouver? You must know that no matter what you say, you will never change their perception. You are right, it’s a short trip from that to racism, intolerance, xenophobia and simple hating. It is so obviously stupid and a total waste of time!

You must also know that regardless of what these HAM hating people say, most of us who believe that these people are idiots will never be convinced by their idiotic and racist point of view. We know better.

This is what we know – whatever is wrong with our real estate market is the fault of people in Canada – politicians, policy makers, regulators, buyers, sellers & enablers (RE agents, mortgage brokers and banks); not foreigners.

Because I normally read the comments that you respond to, you are making me waste my time. I really hope these people ban your blog and just leave – not just for a month – FOREVER. Then maybe you’ll have more time and energy to focus more on positive things that most of us who visit your blog look forward to everyday. And yeah, thank you for all the valuable lessons that are free of charge. Much appreciated.

#163 Tamsen on 07.17.14 at 2:11 am

” ILoveCharts on 07.16.14 at 5:33 pm

HAM is not the only factor but it does make a
contribution. Come visit my condo building and you will see first hand. And yes, I know the difference between someone who has Asian genes and someone who has Asian money.”

This isn’t about racism. I’ve got nothing against these people.”

“X
Also, I am sure the RE cartels do know how many foreigners are buying homes. But having people not know, currently works in their favour. Were the gov’t to ponder increasing the property taxes of HAM, I am sure that the RE boards would suddenly show stats similar to what Garth mentioned, to show foreign money isn’t that substantial, so no reason to push foreign money elsewhere. Canada wide, HAM is a small %.

Although what do you expect from a self serving association in an unregulated sector, where more people have more wealth that ever before.”

So many posts ringing true here! One need only live in Vancouver for a short period of time to experience this and see things are changing here and not necessarily for the better. Endless anecdotals about money laundering and especially HAM all cash deals abound.

Why would any RE board spill the beans and kill the golden goose? …

#164 Andrew Woburn on 07.17.14 at 2:12 am

#59 Bob Rice on 07.16.14 at 7:34 pm
“…the average Toronto house in 1975 cost $57,581. Expressed in today’s dollars, that equals $216,248. However, the average property is now selling for more than twice that – $549,174…”
===========================

There are now nearly twice as many people in Canada as in 1975 and a far greater percentage live in major urban areas. Mortage interest rates are currently far lower. Government mandated construction standards are far higher and costly. Therefore it is not really surprising that house prices are much higher.

#165 Joe calgary on 07.17.14 at 2:24 am

Oh and I forgot to mention the ‘Chinese Canadians’ that get citizenship by ‘investing’ in Victoria car dealerships. So again buying their way into the country. I realize that this may not skew the whole Canadian market but it has certainly skewed the west coast market.

#166 cynically on 07.17.14 at 2:25 am

#79 X – HAM may be a small % in the total number of residences (houses and apts) but it is a much larger % in the total cost of them due of course to their high prices. In other words locals may be buying more quantity but HAM is buying more quality.
By the way, is Mark Garth’s alter ego?

#167 Son of Ponzi on 07.17.14 at 2:35 am

#59 Bob Rice on 07.16.14 at 7:34 pm
“…the average Toronto house in 1975 cost $57,581. Expressed in today’s dollars, that equals $216,248. However, the average property is now selling for more than twice that – $549,174…”

In 1975, there were VERY few condos or towns. If you lived in one, you were probably a renter. So most of those homes were single detached – believe me I remember growing up in that era and pretty much everyone lived in a detached home and some semis in the old city – that means that we are pretty much comparing a single detached then ($216K) to a SDH today ($900K). So a factory worker was able to buy a SDH with a decent size yard… amazing…
—————-
That’s why I came to Canada in 1977.
But now were are being told that we all have to live in tiny apartments, just like in the Middle Kingdom.

#168 The_Iceman on 07.17.14 at 2:42 am

Garth:

I find you to be a reasonable guy (…hell, you even signed one of the books I ordered from you), but I just about threw up my cookies reading your response to poster #113.

Per the stats I posted last night about ESL in Vancouver-area schools, you then applied the figures against the total province-wide school population. We aren’t talking about the province of B.C. – we’re talking about the city of Vancouver and various suburbs such as where I live (Richmond).

In Richmond, 28% of students are deemed ESL. Even more specifically, – close to where I live, at William Cook elementary, 66% (yes…two-thirds!) of students are deemed ESL. So let’s cut the BS and call it for what it is – there are a helluva lot of foreigners living in the greater-Vancouver area, and they are bidding-up real estate prices. (All I ever hear is that Richmond is “over 50% Chinese”. This doesn’t mean they are all foreigners, but you’ve got to recognize that there is an extremely large foreign influence in the real estate market here).

For years, you have told us to make up our own minds and to “see” what the statistics are telling us. Why do you simply choose to ignore the data in this case?

Your reply to post #113 tonight quotes the BCREA as stating (“estimating”) that only 2% of transactions are made to foreigners. Are you kidding me?…you’re now quoting (“believing”) the BCREA, when all that you’ve posted the past several years is how the real estate boards “make up” their statistics, and should definitely not be relied upon (…especially when they don’t even have real data themselves, but are only providing an “estimate”)? This, frankly, shows how weak your argument is.

I am not a racist (…in fact, my Chinese girlfriend and her family will back me up on this), but to bury your head in the sand is doing everyone a disservice. I welcome you to come to Richmond one day (…just a few km from the Vancouver airport) and ask the taxi driver to drive down No. 3 Road…you’ll think you’ve just landed in Hong Kong.

#169 wes coast on 07.17.14 at 2:53 am

Anecdotal observation: I have a friend who is on a strata council in a newer Burnaby highrise. 95% of the owners are asian and don’t speak english. To the point where they want all council meetings to have a mandarin translator attending.

He is a well dressed non-asian fella and when walks in the building he gets a look that says ‘what is this guy doing here?’.

Canada is a plural diverse society yet our policies of foreign ownership are jeopardizing this legacy. Racism is a two way street, and creating vast pockets of foreigners that dont speak the language and are intolerant to others is not Canadian. Directing racism back at these folks is even more wrong as this is not their fault. This is a policy issue and we should write representatives to look at a fix.

As a juxtaposition, the first building i lived in had a population that developed over years of normal economic times and it has to this day a diverse mix of young and old, asian, european, canadian, and people from just about everywhere else. I called it the UN. Everyone gets along, speaks English or does their best to try to at least. Everyone helps everyone where possible. It is the hallmark of what Canada should be.

We should monitor foreign ownership. Immigration is great. Diversity is essential. Tolerance an absolute. Equality – non negotiable. All of the above: a two way street.

My parents are both immigrants and benefited from integration and mutually benefited the economy. TheY were never emersed in their own culture so as to shut out Canada. My father even directed us to never speak our first language in front others who wouldn’t understand as this was rude.

I think our policies can do better to find the balance again.

#170 Andrew Woburn on 07.17.14 at 2:58 am

Perhaps Vancouver and Victoria are not really that different. One has apparent HAM, the other has HOM. The effect on local wage earners is the same.

Logically, house prices in a community will bear a close relationship to what average people earn there. However some communities attract a far higher proportion of house buyers who earned their money somewhere else and whose financial capacity is not tied to local earnings trends. Victoria has lots of Hot Old Money. If you are a house hunting truck driver it does not much matter whether you are competing with a “naked official” who has been skimming contracts in Shandong or with a retiree that just sold his car dealership in Moose Jaw. They want a piece of your community and you are outgunned. How many Americans believe they have a “right” to live in Beverly Hills?

Trying to ban foreign buyers from Vancouver makes about as much sense to me as trying to keep Albertans from buying in Victoria. If the foreigners are devious enough to have scored millions in dirty money, they will find a way in anyway. If their cash is legitimate, what’s the problem?

#171 Son of Ponzi on 07.17.14 at 2:59 am

#72 Mark on 07.16.14 at 8:11 pm
“So if HAM is declining, why are prices still rising?”

RE prices aren’t rising and haven’t been rising for the past year or so. But what has changed is the sales mix, with the low-end largely dropping out because first-time buyers are simply priced out of the market and CMHC subprime credit is increasingly less available.
————-
Finally, someone is talking about the sales mix that is trending towards the higher priced units.
And the lower priced units are just loss leaders.
Every store keeper knows that.
It’s Pareto’s law, blog dogs.

#172 The American on 07.17.14 at 3:20 am

Garth, interesting topic. You mentioned Seattle in your post as a city for which HAM would dump Vancouver and move. Guess what? It’s exactly what’s happening here. Statistics prove it. HAM from BC moving to Seattle has increased over 60% YOY. No joke. Seattle is simply on fire right now. But the propped up real estate market in Seattle appears to be far more sustainable than anything seen in Vancouver at the time, and even though BC HAM is purchasing here in droves, the bottom line is that the vast majority of buyers in the Seattle market overall are locals and people moving from the East coast. Average list price is now pushing against $685,000, and a median sale price of $442,500, up almost 5.5% YOY. Average price per square foot up almost 12% YOY. Listings? Falling sharply. Reasoning? National Public Radio had an excerpt on it recently explaining that with all the cash buyers showing up in the Seattle market all of a sudden that Seattle home owners who wish to stay in Seattle are fearful of selling out of fear of being priced out of the market as most would not be able to show up as cash buyers to compete and repurchase in the Seattle market. Also, Seattle now has more new developments going high in the sky than Vancouver. Seriously, the city looks like a pin cushion with all the drains going in. Much greater “boom” than what was seen in the Seattle market just 8 years ago.
http://www.trulia.com/real_estate/Seattle-Washington/market-trends/

#173 Aaron - Melbourne on 07.17.14 at 3:24 am

#20 Frustrated Kiwi on 07.16.14 at 5:31 pm
The simple fix is for Canada (and NZ) to adopt Australia’s rule – offshore money can only invest in new builds, not existing residential property.

Hahahahaha!!!! Surely you jest?

The FIRB (Foreign Investment Review Board) has not enforced those rules. Foreign investors are running amok in Melbourne and Sydney. Lots of HAM, NOT ONE PROSECUTION!!!

And if you doubt me do a google search for “Chodley Wontok” and read up on Macrobusiness.com how it was proven that you can fake a name and get FIRB “approval”. Not that the Agents require sighting any form of approval, just a big fat cheque on the fall of the hammer. Its a total free-for-all.

The Reserve Bank of Australia, The FIRB, APRA are all turning a blind eye. Government of both persuasions have presided over the period. Selling Australia to China one patch of dirt at a time is POLICY.

#174 LotusLand on 07.17.14 at 3:33 am

I really lament when people play the “racist” card when one speaks out against “HAM”. As an adoptive Vancouverite (moved from Toronto in 2008), my sense is that much of the disdain is toward the mainland Chinese. Now I might only have a master’s degree in human geography but correct me if wrong, mainland China is a country and thus the people whom live there are an ethnicity and not a race. My sense is that there is no disdain toward the Hongers that moved to Vancouver in the 1990s despite them being exceptionally wealthy.

The disdain is complex. I am offended by the fact that mainland Chinese residents out at UBC attempted to lobby UBC and the CoV for permitting a hospice on endowment lands. This group of people claimed that the proposed hospice was against their religion, masking their true concern of potential impact on property values. It must be great to be a visible minority and play the race card when you are greedy, shallow, and self-interested. I also am saddened that Chinese government officials have greased the palms of local CoV politicians to try and have the Falun Gong protest hut removed out the front of the Chinese embassy, less their atrocious human rights record be made further public. The right to assemble and protest is a fundament Canadian right. Yes, Garth, I take issue when a group of self-serving mainland Chinese attempt to impose their lack of respect of human rights and freedoms upon us.

Lastly, your stats on Victoria can’t be extrapolated out to Vancouver. It has to be one of the whitest places in BC. Regardless, you fail to define what is “Canadian” and forget that Chinese nations bought citizenship to this country under the Investor Immigration Program – are these people “Canadian”? The “astronaut” family whereby a man brings his family to Canada to benefit from social services, only to return to China to work and sleep with his mistress, is well-documented, even appearing in peer-reviewed academic articles.

I really enjoyed reading your blog up until today… I think you have oversimplified a very complex issue. It makes me wonder how much you do this with other statistics I’m not as familiar with…

Say the number of international buyers is 15 per cent in YVR (not unrealistic). This is sizeable demand and would have a profound impact on prices. Supply and demand my man. I’m not saying this group, wherever they might hail from, is responsible for the steady increase in prices BUT it certainly wouldn’t help stabilize prices or prevent a write-up.

Quit letting bias creep into your blog articles. You’re almost as bad as Margaret Wente…

#175 Rainmaker on 07.17.14 at 3:42 am

Post #95 – from James

“You should put a voting mechanism in to give weight to these comments, like Reddit. You wont feel so bad about the racists and xenophobes, and we can move off this stale topic already! As a software developer, I’d be happy to help you find a technical solution.”

I would also support some upgrades – sorry no software skills here to help. This is a very useful blog with some great insight by many, but there are some posters who post nonsense.

One way to enhance the value would be to provide the functionality that allows registered members to be put on ignore by others. Those who consistently post nonsense quickly find they are “talking” to a limited audience. This is done with many investment websites like Stockhouse.com and Investorvillage.com.

#176 Matthew G. on 07.17.14 at 3:44 am

“The BC Real Estate Association estimates total offshore sales in the Lower Mainland amount to 2%. Similar to Victoria numbers. I would welcome yours. — Garth”

Errr…so today we’re trusting realtors’ numbers?

I think it might be best to just admit we don’t have credible stats for the Lower Mainland market.

I also have to agree with some others that extrapolating Victoria numbers to draw a conclusion about Greater Vancouver is a very weak comparison. Having grown up in one area and then lived 10 years + in the other.

#177 TomOfMilton on 07.17.14 at 4:41 am

Oh He’ll. Now I’ve got that song stuck in my head!
…riding out on a horse in a star spangled rodeo…

#178 Spiltbongwater on 07.17.14 at 5:24 am

I love going to Aberdeen mall in Richmond. I go there as the Asian food is really good. From my observations, I can count the number of white people on 2 hands including myself. At Daiso store I bought an air freshener that warns “do not leave near a demented person as the demented person may eat the air freshener and get it stuck in the trachea.” I don’t know any demented people but I do use caution with the air freshener.

#179 backwardsevolution on 07.17.14 at 5:51 am

“The BC Real Estate Association estimates total offshore sales in the Lower Mainland amount to 2%. Similar to Victoria numbers. I would welcome yours. — Garth”

In post after post, Garth comments about the manipulation of statistics by real estate associations and boards, and yet here he uses their figures. Wow! Yeah, they couldn’t be lying, could they?

#180 Jim Halberg on 07.17.14 at 5:51 am

Garth
I remember the Vancouver real-estate boom ending in the 80’s they said the same thing about buyers from Asia but when the facts came out it was much the same as your figures. No one believed it could end back then either. As an example a home I had in the interior of BC went from an appraised value of 104k to 87k in 3 months and my employer ended up selling 3 months after that for 67k.

#181 FOREIGN TAKEOVER on 07.17.14 at 7:19 am

I would just like to share a quick story that will illustrate how your Victoria number may be skewed.

I currently moved into a rental in liberty village. The agent that was dealing with the unit for the owner informed me that I was to deal with him on all issues as the owner is a 20 year old Chinese immigrant that he manages property for. Her parents who live in China have purchased 3 condos @ approx. $500k value and 3 houses over $1mill value each in Toronto in the daughters name (a candian resident) all with no mortgage. He also informed me that bidding wars and conditions of houses are no concern as the parents just use this as a way to take money out of china.

My rental condo last year was also owned by a Chinese couple not living in Canada and managed by a real estate company.

Goodluck!

Did you refuse the rental, on principle? — Garth

#182 David on 07.17.14 at 7:21 am

Wow. Same thing being trotted by the ignorati in Australia. Makes me feel better that we don’t have exclusivity over morons.

#183 Nomad on 07.17.14 at 7:48 am

Garth has a good point. Let’s stick with facts because there’s definitely motive behind realtors trying to convince buyers that foreign money is invading them.

Smart people don’t make an opinion based on impressions or a few “samples” picked up from their daily lives.

You people have to check out Trulia. We need a website like this in Canada. Really, go take a look. You can get the average price decline in a region and the number of foreclosures. For example, there are 4400 forclosures in LosAngeles right now and the average price change is a decline of a few thousand dollars.

Hey the average house price in the US is below 200k. Really?

#184 Musty Basement Dweller on 07.17.14 at 8:00 am

I think Victoria is the most caucasian and British city that there is in Canada. I would say the impact of HAM in Vancouver would be at least 10x Victoria.

Having said that it seems there is no question it is the easy money and CMHC that have caused the current bubble in Vancouver, as with other Canadian cities.

I feel so sorry for anyone who has bought a house in Canadian markets in the last few years or who is looking at buying into this ponzi situation.

#185 Mark on 07.17.14 at 8:10 am

“It’s complete insanity what’s going on, but it just seems that it has all shifted upwards in price (for now). Is there a segment that is trending downwards?”

All segments are trending downwards. The Realtors are just transacting in the higher end stuff, as the lower-end stuff simply languishes on the market as the first-time buyers have largely been locked out.

Hitting the CMHC subprime mortgage insurance limit last year, and the Budget 2013 tightening has been a very big deal.

#186 Mark on 07.17.14 at 8:13 am

“Finally, someone is talking about the sales mix that is trending towards the higher priced units.
And the lower priced units are just loss leaders.
Every store keeper knows that.
It’s Pareto’s law, blog dogs.”

Everyone who has tried to discuss the “sales mix” issue on the RFD forums has been trolled out of existence by the resident Realtors and various other assorted RE bull trolls.

Pretty sad that the Realtors have stooped to engaging in a propaganda war to keep their fantasy alive, rather than being impartial professionals and recognizing the reality of the situation.

#187 Mark on 07.17.14 at 8:16 am

“there are a helluva lot of foreigners living in the greater-Vancouver area, and they are bidding-up real estate prices. “

I don’t think anyone disagrees. At least I don’t.

What I disagree with, based on the evidence at hand, is the suggestion that there’s actually “HAM”, rather than simply a whole pile of debt being taken on by the new and existing Canadian crowd to support the prices.

Evidence is abound for debt. Evidence of foreign cash is practically non-existent. Heck, there’s even some evidence of cash being illegally exported from Vancouver, and CBSA exit inspections, for undeclared currency, are extremely commonplace on Asia-bound flights from YVR and YYZ.

#188 Yuus bin Haad on 07.17.14 at 8:27 am

OK, I just came back to … well, I just did.

Boycott starts …

NOW!

#189 NYCer on 07.17.14 at 8:43 am

Um, is there a reason why we are comparing minimum wages changes to house changes? I thought minimum wage earners don’t really buy houses.

Shouldn’t we be comparing median/average income?

Minimum wages are more consistent across all jurisdictions. It’s a valid yardstick of economic progress. — Garth

#190 Carly in Cabbagetown on 07.17.14 at 8:46 am

Garth, I’d like to speak a little truth to those professing all this thinly-veiled racism on your site.

First, some background. For many years I have worked and volunteered as a board member with agencies providing settlement assistance to newcomers. Family dynamics, economic integration, these have all been my bread and butter.

There are some powerful trends happening that are rarely talked about, happening here and abroad.

The biggest among these is the disintegration of white families. Look at the catastrophe unravelling for white school kids in England:

http://www.dailymail.co.uk/news/article-2660739/Open-schools-ten-hours-day-tackle-failure-white-working-class-pupils-say-MPs.html

These kids are falling so far behind their recent-immigrant peers that they will likely never catch up, economically or socially. (Who do you think will own most of the real estate in the next generation in the UK, the students who fail or those who succeed?)

Why is this, you might ask?

From my experience, the answer is clear. Family integrity and cohesion is typically much stronger in recent-immigrant families.

What’s the biggest predictor of family cohesion and economic viability?

The behaviour of fathers. By a country mile.

What’s the most alarming difference between immigrant and Canadian-born household makeup?

White, Canadian-born households have an enormous level of separation and divorce compared to immigrant families. And a higher rate of divorced fathers not paying proper support.

Now, I would guess-timate that about 75-90% of your blog commenters here are white males. (Just call it my intuition, and I challenge anyone to prove me wrong).

No wonder they might be sensitive to immigrant success in real estate. For decades, white males could do as they pleased, fool around, divorce, get away with murder, and not see their economic advantage slip at all. It was still their game to play economically, regardless of the bs in their personal lives.

Too many (not all, of course there are many good ones) got into the habit of being, well, schmucks.

Immigrant fathers are much less likely to feel such entitlements. They put family first, building up their economic vitality for themselves and their children.

This is the legacy we are starting to see in economic and class differentiation in Canada, that so many seem to resent, now cowering behind racist resentment like some we see on this blog.

Look yourselves in the mirrors, white males. Did you divorce your wife, separate from your children, for anything less than a truly life-or-death reason? Why, on earth, did you?

The immigrant fathers and families who did not, who are sticking together and eating your lunch have some words for you.

Schmucks.

Losers.

Or, more kindly, they might just shake their heads and sadly wonder why so many white Canadian males just don’t seem to understand the fundamental connection between male responsibility, family stability and economic and social health and wealth.

We are now living through the social effects of the first and second generations of casual divorces that started in Canada around the late 1960s to early 1970s. It will probably get worse before it gets better.

Keep your eyes on the UK. What happens there will probably happen here too.

White males should not be looking at “HAM” as the source of their economic disadvantage.

They should be looking in their mirrors, and at their fathers.

#191 Inglorious Investor on 07.17.14 at 9:10 am

#38 Mark on 07.16.14 at 6:28 pm

“Inflation destroys the value of RE, […]”

Higher interest rates, not inflation.

Higher rates can erode the prices of properties (or any heavily debt-dependent product) because higher rates make such assets less affordable.

As real assets, properties generally go hand in hand with inflation. This also includes stocks. This is because, in the long run, properties and stocks (or the businesses whose value they represent) require substantial inputs of energy over time (energy and time being among the most valuable commodities we have).

A currency can be thought of as a ‘universal commodity proxy’––i.e. the ‘commodity’ that everyone uses to trade goods and services.

So when you ‘buy’ a property, you are trading that property for a given number of currency units (dollars). If the supply of dollars increases faster than the supply of properties (i.e. inflation), then the value of the currency will decline relative to those properties. Therefore you will need to trade more dollars for the same property as you did before. Higher price.

This is simplified, but you get the idea.

#192 Foreign Takeover on 07.17.14 at 9:15 am

We’re all screwed, Make some money where you can and look out for yourself……Taxes going up, government services will eventually be downloaded, no one is saving, everyone thinks they are entitled to everything, manufacturing has disappeared, mom and pop shops are gone, foreign businesses are buying up everything Canadian owned, Margins are evaporating across industries, the post secondary education system is scamming 60% of its customers giving them useless degress.

Create some wealth and save yourself and goodluck when this all starts to fall apart.

#193 a prairie dog on 07.17.14 at 9:28 am

“Now municipal Van politicos want to collect those numbers (somehow), presumably so they can enrage the masses and impose ownership restrictions.”

Is this our modern day McCarthyism?

#194 Shawn on 07.17.14 at 9:46 am

Stop blaming HAM

Carly in Cabbagetown at 190 suggests schmucks and economic losers should look first at their own actions for blame, not immigrants.

Excellent post, I agree with it.

#195 Ronaldo on 07.17.14 at 9:52 am

#180 Jim Halberg -”As an example a home I had in the interior of BC went from an appraised value of 104k to 87k in 3 months and my employer ended up selling 3 months after that for 67k.”

I recall this as well Jim, I specifically remember that a 1000 s.f. home sold for $90,000 (90 s.f.). This same home lost 35% of its value and went down to $58000. The market went flat until around 2004-05. A twenty year drought. It will happen again.

#196 Smoking Man on 07.17.14 at 9:58 am

 

Bond yields lowest in a year, possibility exists to get a five year rate for 2.60 % maybe even 2.5%

This is the reason why. HFM Hot Foreign Money. 15.9 billion in Bonds.

Don’t you pricks hate it when I’m right…. Ha ha

http://www.bloomberg.com/news/2014-07-17/foreigners-buy-most-canada-securities-in-two-years-led-by-bonds.html

#197 torontorocks on 07.17.14 at 10:02 am

Garth – here’s a question. Obviously no-one can effectively time a market and there’s a lot of back and forth about making a move into the current market. But if someone were to be rebalancing a portfolio (taking gains from equities and now shoring up the FI side) should they be taking the gains and parking it in cash or deploying in 1-5 year laddered corps?

Second, if I was creating a portfolio right now, would you say deploy all of it now or say in increments. Or in stages by way of asset class? $100,000 all in a diversified portfolio? Increments of that $100,000 in a diversified manner or wading in by asset class (deploy FI now, then Equities, etc)

Thanks, my son.

There’s no one simple answer that fits all. If you are young with a long horizon, then paying 10% too much for assets now will pale over decades to come. If you’re skittish about short-term fluctuations, buy assets only when they retreat to, say, a 200-day moving average. If you want to straddle, keep 50% in cash and deploy the rest across all the asset classes you want in the balanced and diversified portfolio. Or get somebody smart to help you. — Garth

#198 torontorocks on 07.17.14 at 10:30 am

Thanks Garth – you may be getting a ring soon.

#199 MoneyMyHoney on 07.17.14 at 10:49 am

#1 renters rule
Stephen S. Poloz was on CBC this morning. The fact is interest rates are not going to go up any time soon. The new norm for England according to Mark Carney is a reduced interest rate. Given the state of the world economy, you can extrapolate the above two and apply it to the world.
By the way economics is not a definite science. The fact is, there is no science in it. If it was a exact science, then whatever Garth or David Madani or Ben Rabidoux was talking about in 2009 (house price going south by at least 15%) would have come true long back. Instead the prices went north by nearly double.
In soccer the goal post is fixed. In economic predictions the goal post keep shifting. That is why the economist keep revising the forecasts all the time. Right now it is the home owners that rule. Renters (including me) are the losers.

Mortgage rates will definitely be increasing, regardless of central bank actions. And house prices have not doubled in the past five years. Sorry you’re a loser, but you are probably the architect of your own situation. — Garth

#200 Poorgeoisie on 07.17.14 at 10:58 am

After hearing some aussie commentary today I got to reminiscing about a figure who can really be described as the personification of the housing market in our two nations: Steve Irwin
I remember watching and thinking “Steve, that alligator doesn’t really need to be turned around.” Or “Steve, that poisonous snake probably doesn’t like having a bushy stick shoved in its face”.
Surely he had his experts around and everybody thought it was under control until it happened and when it did we all collectively thought to ourselves “What a shame, but I totally saw that coming”

#201 Abin Batince on 07.17.14 at 11:09 am

Dear Gartholomew,

What about plan B?

#202 FormerSaskie on 07.17.14 at 11:09 am

#160 Ronaldo I checked your mortgage math on a TD mortgage calculator and the mortgage alone is $2010.00. Adding property taxes and condo fees will bring the monthly to $2500.00 or so. Which is more than 50% of take home pay. Be happy you purchased your unit when you did!

#203 Dewflicker on 07.17.14 at 11:16 am

#141 vandammecouver – I like it. I was behind this guy on the Burrard street bridge about two months ago and could not resist taking a similar picture of the HAMobile. The guy driving was dwarfed by this hulking beast of a car. I was of two minds whether to submit it for Garth’s blog but never got round to it. I suppose it was only a matter of time…Thanks.

#204 Inglorious Investor on 07.17.14 at 11:24 am

#190 Carly in Cabbagetown on 07.17.14 at 8:46 am

Most of the white males that I know are married with children. They typically make good to great money working very hard in their careers / jobs so that their families can prosper and their kids can get a good education. Most are well educated, but not all. Professionals. Tradespeople. Businessmen. Labourers. By and large they are devoted family men who make huge sacrifices and great efforts for their wife and kids, and they readily help and support their extended families, relatives and friends.

#205 Alex n Calgary on 07.17.14 at 11:29 am

While I agree with you that its factors other then HAM driving up prices, I have lived in Victoria and its quite a bit less Chinese then Vancouver.

Problem is that just like total white trash albertans I dislike, I don’t often like recently immigrated Chinese, they seem to come from a very different world, especially the older parents who are brought over by the kids. Lots of super yelling into phones and to friends on bus, acting terrified of our dogs at off leash park (maybe should goto non off leash park) all activites again that white people can do, but I can see why Canadians that have been here for a while would dislike said people and blame them for real-estate woes.

(reminds me of when I was a cable buy in Brampton and the many white people selling because of the high influx of recently moved from India population) Immigration is good for Canada but uncomfortable for the people already living here.

#206 TheManwhoStaresatSheeple on 07.17.14 at 11:37 am

Some more stats 1975-now to complement the ones published above – although not sure if you will allow them to be posted here.
==================================
GT – “Stats Canada says the average minimum wage across Canada today is almost the same – $10.14. Meanwhile the average Toronto house in 1975 cost $57,581. Expressed in today’s dollars, that equals $216,248. However, the average property is now selling for more than twice that – $549,174”
==================================

Price of gold in 1975 – around $161/oz or around C$156/oz (C$ was above par for most of the 1974-1976).

1975 av. price – $57,581 or around 369 oz gold
av.price now – $549,174 or around 392 oz gold (using C$1400/oz)

It just looks like the av.price is where it should be! (but the BoC inflation given and used may not be what it really was)

PS. And while in the not political correct land – a question to the #190 (Carly at Cabbagetown) – just a hypothetical question and too bad you do not have a polling:

If a married WHITE male (with three kids) with the best qualification possible , with sizable experience right now competes for Government job, Bank job or any other large company job what are his chances if he does not have relatives working there and his competition is from:
– single white females;
– members of the LGBT
– visible minorities…

#207 Rational Optimist on 07.17.14 at 11:39 am

58 Catalyst on 07.16.14 at 7:33 pm

“It isn’t racist to say Brampton is mainly South Asian (india/pakistan/srilanka) or Markham is mainly Chinease.”

It’s probably indicative of racism (and is indeed proof of ignorance) to have that opinion, though. You don’t need to be a rocket surgeon to look up and see for yourself what the facts are, instead of just “knowing” things because you have heard them so often. Less than 40% of Markham is ethnically Chinese; about the same proportion of Brampton is ethnically South Asian. 40% of Markham speaks English as their mother-tongue, so I’m willing to bet that the people you call “Chinese” are to a wide extent native-born Canadians, anyway. Unless your definition of “mainly” is “more than the white population,” your statement is just wrong.

This blog is a lot more interesting when it doesn’t have to belabour the point that offshore money’s impact is grossly overstated.

#208 Carly in Cabbagetown on 07.17.14 at 11:48 am

#204 Inglorious Investor

Agreed. I know many great white males too, including hubby and dad.

But the numbers don’t lie. For white males in Canada, separation and divorce rates are higher, resultant instability in the home for their children is higher, school results suffer dramatically for those children, and the result is what is happening in the UK right now. We are close behind.

Humans are inherently equal in their potential, in my opinion.

Males in North America had it too easy for too long, however. Most of them just happened to be white. They got to think with their little heads instead of their big heads for generations – if they chose too, and not all did, of course.

They made decades of irresponsible “Mad Men” -like decisions and life choices, and families have suffered. They undermined the chances of success for their own kids, now generation x and millennials, respectively. Those kids are doomed to pass a lot of that along to their own kids. Chasing stupid hallucinations like real estate speculation riches, instead of developing habits of hard work and diligent study.

Immigrants are just not doing this to anything close to the same degree.

Unless there is a sea change in behaviour among white fathers, in Canada as well as the UK, …..

This won’t end well.

Think about it: white, working class families are now a distinct underclass in Britain.

Would you have believed that could happen ten years ago?

Rather than blame HAM, or the school system for their own and their kids’ bleak economic prospects, it’s time for people, especially white males, to stand and deliver.

If you are doing that already, good on you. Encourage others you know to do the same.

#209 Mixed Bag on 07.17.14 at 11:49 am

#190 Carly in Cabbagetown on 07.17.14 at 8:46 am

“just don’t seem to understand the fundamental connection between male responsibility, family stability and economic and social health and wealth.”

Yes.

#210 Son of Ponzi on 07.17.14 at 11:52 am

At least the license plate is in one of the two official languages.

#211 Panhead on 07.17.14 at 11:53 am

Sold my Pa’s house a few months ago for him in East Van for a stupid amount of money. Only house he’s ever had. Very steep 33′ lot on a major street. 14 offers I think in a bidding war. Ended up going to a local fellow who tore it down yesterday. No HAM here. Only wish my Ma was still around to enjoy their fruits together. It’s easy to get too old to spend it …

#212 Nemesis on 07.17.14 at 11:57 am

“Can we burn some bras, too?” — Garth

I’m quite certain Galileo, were he alive today, would wholeheartedly endorse that proposition…

For as we all know, he was an ardent advocate of ‘heavenly bodies in motion’. So much so, in fact, that the prevailing orthodoxy/establishment went to rather extravagant lengths to brand him as just another reprehensible, RhineStoneCowboy…

http://en.wikipedia.org/wiki/And_yet_it_moves

http://youtu.be/BBWOdASBjm0

#213 Brutus on 07.17.14 at 12:04 pm

This is terrible.

http://www.bbc.com/news/world-europe-28354856

My relatives have confirmed that this plane was shot down by pro-Russian separatists.

This is the beginning of it all, everyone.

The Ukraine government will have no choice but to escalate against the rebels. Russia will not consent.

We will have major warfare within days.

This is the Black Swan, possibly for our decade and generation.

Bail out of anything you can’t covert to cash quickly.

#214 Pre Retiree on 07.17.14 at 12:14 pm

In reply to: #28 Shawn
Is it disingenuous to mention that fact while omitting the fact that interest rates are well less than half what they were in 1975?
Affordability is based on the monthly payment compared to income.
__________________________________

Shawn, is that last sentence meant to be ironic?

Heard Poloz on The Current this morning, and he admits being in a pickle, acknowledging that if interest rise, too many people will have trouble meeting their obligations. He did not want to get push in predicting a rise in interest rate, and even suggested that lowering the rates is in the cards. I think that comment is scary, and would push people into taking even more debt. I like to believe Garth is correct in saying that setting interest rate is not entirely dependant on our economy, and has to take into account the US (as in end of QE). In any case, I truly believe a slow rise in interest would be beneficial. But how can one guarantee a slow rise? It could be rapid, and even a very low percentage would potentially create havoc.
So, no, affordability is definitely NOT based on the monthly payment as that monthly payment can suddenly be way too much to carry, or…income can disappear, then what?
I don’t think our country can sustain living very much longer with these low interest rates without getting much further into trouble.
And BTW, this debt has nothing, but absolutely nothing to do with foreigners buying our real estate or not. if they do exist, they did not sign on the dotted line for us for the too expensive house, the new car, the granite counters, the wine fridge, and stainless steel appliances.
Freedom is truly about financial freedom.

#215 Millenial on 07.17.14 at 12:27 pm

http://www.theeconomicanalyst.com/sites/default/files/article_inside/2011/08/victoria_price_rent.jpg

Victoria home prices have more than doubled over the past 12 years or so. And as Garth’s stats from the Victoria Real Estate Board show, it’s not cause of foreign buyers. The point I take from this is that home prices are seriously inflated in Canadian cities (i.e. Victoria) EVEN WITHOUT FOREIGN BUYERS. Does this make sense to you guys?

Is HAM contributing to even higher prices in Vancouver? Maybe. I think we can all agree that we are lacking reliable stats on who’s buying what in this country.

I need to also add that I agree with some of the comments about Garth’s use of word ‘racist’ : strikes me as a little BarbaraHall-esque.

#216 };-) aka Devil's Advocate on 07.17.14 at 12:27 pm

Heed Jim Carey’s Good Advice

#217 Ogopogo on 07.17.14 at 12:32 pm

#199 MoneyMyHoney on 07.17.14 at 10:49 am
Right now it is the home owners that rule. Renters (including me) are the losers.

Speak for yourself, loser. As a savvy renter-investor, my double-digit ROI has outpaced housing price declines in Kelowna by orders of magnitude. The same can be said for just about any rent-vs-own scenario in Canada.

But don’t let the maths get in your way.

#218 Ralph Cramdown on 07.17.14 at 12:34 pm

#190 Carly in Cabbagetown — “White, Canadian-born households have an enormous level of separation and divorce compared to immigrant families.”

That is a really lame comparison. I’m not disputing it, and have no reason to believe it isn’t true. But I also believe that emigrants generally represent some of the most successful (by whatever means) and striving families in many countries. Comparing people who’ve left everything behind for a better life to people who’ve accepted the defaults that they were born with seems like a big fail. Further, immigrant wives may feel they have fewer choices than wives of deadbeat natives, who share the same skin colour, culture and language of the majority of better mates in the local pool. Fewer choices means less reason to leave.

I’m no Margaret Mead, but I think your comparison is crap.

#219 Conservative Party of Canada Public Relations Weasel on 07.17.14 at 12:34 pm

So just to be clear, everybody, please get these facts straight.

Mike Duffy RECEIVING money from the PMO is an example of fraud and bribery.

Nigel Wright GIVING the money to Mike Duffy is completely innocent.

See how that works?

Our next project will be to help Joe Oliver explain away the coming real estate crash. It will be fine, don’t worry.

#220 stage1dave on 07.17.14 at 12:35 pm

I actually found the last bit of that post more interesting than the first bit…mind you, frequent visitors to this blog are more than familiar with the theory of “offshore-driven” property values; especially in the rain forest.

Once again I’m reminded of why I’m completely out of step with the majority of this society…I can barely remember “Rhinestone Cowboy”, but was obviously already turning my back on top 40 radio.

All I remember about that summer is lots of BTO, Nazareth, & Black Sabbath…& a grungy job digging thru SK gumbo doing basement repairs for the princely sum of $3 an hour.

Now if only I could get Mom to put a roof over my head again, buy the food, & cook all the meals, I’d gave it made!

#221 HD on 07.17.14 at 12:53 pm

@ #206 TheManwhoStaresatSheeple on 07.17.14 at 11:37 am

PS. And while in the not political correct land – a question to the #190 (Carly at Cabbagetown) – just a hypothetical question and too bad you do not have a polling:

If a married WHITE male (with three kids) with the best qualification possible , with sizable experience right now competes for Government job, Bank job or any other large company job what are his chances if he does not have relatives working there and his competition is from:
– single white females;
– members of the LGBT
– visible minorities…
———————————–

Indeed….

http://www.cbc.ca/news/business/wealthiest-1-earn-10-times-more-than-average-canadian-1.1703017

Best,

HD

#222 Son of Ponzi on 07.17.14 at 12:53 pm

Told ya!
http://www.theprovince.com/news/Premier+Christy+Clark+pitches+Vancouver+first+offshore+settlement/10029722/story.html

#223 alister brody on 07.17.14 at 1:01 pm

#213, Brutus

Yep, the new false flag event.
Exactly when a new BRICS bank was anounced …

How convenient. exactly when they needed to split Europe and Russia. The plane was flying from Amsterdam…

#224 Rate Direction on 07.17.14 at 1:01 pm

Rates are not going up any time soon. Even fixed rates!

I’ll believe The Bank of Canada over any one else. They make the rules.

Simple.

No it doesn’t. Mr. Market does. Simple. — Garth

#225 Son of Ponzi on 07.17.14 at 1:03 pm

#207
“rocket surgeon”.
Thanks for making my day.

#226 Cici on 07.17.14 at 1:07 pm

Poloz researching what economists call a “neutral interest rate”

“The interest rate where things settle out, things are all done, is probably going to be lower than what we thought in the past,” Poloz told the CBC.

Asked about the level of the “new normal” interest rate, Poloz said “this will vary from economy to economy, but the direction I think is pretty clear.”

Canada’s economy must grow for about two years before completing its recovery, so the question of a neutral policy rate won’t have a near-term impact on monetary policy, Poloz said in the interview.

http://www.businessweek.com/news/2014-07-17/poloz-may-discuss-new-normal-canada-rate-in-october

Insight please Garth? Just what is a “neutral” interest rate?

#227 devore on 07.17.14 at 1:34 pm

#214 Pre Retiree

He did not want to get push in predicting a rise in interest rate, and even suggested that lowering the rates is in the cards. I think that comment is scary, and would push people into taking even more debt.

Probably, at the same time interest rate is just about the only tool a central bank has to stimulate the economy. Traditionally, a few months to a year or two has been a sufficient bridge for the economy to recover and things to get back to about normal. But if the economy won’t budge, we’re in a slow motion race to zero.

People, in aggregate, are idiots. They’re easily led by their nose via incentives. Lower rates, people borrow more, their borrowing capacity is increased because only the monthly payment (debt service) is ever considered in risk evaluation, because the total (debt load) is guaranteed by government. There is much risk in this, and many unintended consequences. A 2% increase at 3% is much more significant than a 2% increase at 6%.

For now, central bankers are in the drivers seat as long as there is interest rate headroom. But what happens when rates go as low as they can?

So, no, affordability is definitely NOT based on the monthly payment

It definitely is. Mortgage debt is backed 100% by government, a lender does not much care what happens to you if rates rise. Just like lower rates brought in more buyers by increasing their borrowing power, higher rates will leave some behind. The marginal administrative cost of hitting up CMHC for the losers is already built into the overhead of mortgage rates. The rest will find ways to service their mortgages at higher rates.

#228 TurnerNation on 07.17.14 at 1:41 pm

Another mind control world event from the elites today. Oh well as long as US indices go kaput.

Closer to home will Duff get the old ‘heart attack’ defined benefit I wonder?

#229 yo on 07.17.14 at 1:42 pm

I am Chinese Canadian, born in Toronto, lived in Hong Kong to work, and now back in Canada living in Markham. Here is my take, for certain areas in Canada, like Markham there could ( I stress could) see continued growth from HAM as simply these people are the ones in China that have simply run off with a bunch of money out of China and are looking for a safe haven. There is a massive amount of corruption in China right now, which the current leadership is trying to address – and allot of hot money is trying to get out. They don’t do any valuations, or look at income to price. Most of this money is taken out of china and they rushing to stash it somewhere. I am currently renting a house in Markham for only $1950 from a HAM, and yet it is suppose to be worth $900-$1M. I don’t even think they are making enough to cover any maintenance issues after taxes.

However, for all those people blaming HAM for the hot market in Toronto, HAM does not buy in areas such as Leaside or Riverdale. They simply don’t, and those areas have experienced massive increases in price as well.

Another problem is there is not much for sale/listings out there, so all it takes is a few HAM buyers, and it makes it look like the market is hot – when in reality, if there were more listings/houses for sale, I actually doubt there is that much demand to support the prices.

Also betting on HAM is a double edged sword, China itself is experiencing a property downturn that could have effects on the ability of HAMs to have access to cash to invest abroad. I have already seen a few new development in Unionville seem to stall, with the developer walking away.

There will always be winners and losers, but the point is if your a guy working a 9 to 5 job and would have to take a large mortgage just to compete with HAM money, its like a lose lose proposition. They are buying houses to stash away some extra side money, your buying houses as one of the largest investments in your life. Its playing with fire.

#230 devore on 07.17.14 at 1:45 pm

#219 Conservative Party of Canada Public Relations Weasel

Mike Duffy RECEIVING money from the PMO is an example of fraud and bribery.

Nigel Wright GIVING the money to Mike Duffy is completely innocent.

See how that works?

No different really from the mental gymnastics required to accept that selling sex is legal, buying it is illegal. Giving money to people is almost always legal (except for unregulated bribery, we look down on that), it is up to the recipient to ensure he is clear to accept it.

#231 randman on 07.17.14 at 1:47 pm

Ahhhem Garth

what was that about the US recovery?

http://www.foxbusiness.com/industries/2014/07/17/microsoft-to-eliminate-up-to-18k-jobs-over-next-year/

MS bought a Nokia division and added 20,000 to its payroll. Non-event. –Garth

#232 Local scams, the Northfield LRT and the blame game. This is the Marshall Report | KW Real Estate News on 07.17.14 at 1:49 pm

[…] was a little dismayed the other day reading the comments on Garth Turner’s real estate and investment blog. I love reading Garth Turner and I sometimes agree with some of what […]

#233 young & foolish on 07.17.14 at 2:04 pm

” it is worrying that the percentage of workers earning minimum wage is growing ”

A real concern about our long term prospects is evolving here. As Garth points out, too much of our labour force is now working in housing. The government cut corporate taxes in the hopes it would spur R&D and investment, instead companies are just sitting on their accumulated profits.

We seem to be all waiting for the next big thing.

#234 Sheane Wallace on 07.17.14 at 2:05 pm

All the pictures of the Malaysian Jet are supporting the case that the plane did hit the ground as a whole in compact state, most if not all of the wreckage is in one place.
If the plane was shot down by a missile it would have disintegrated, exploding in the air. There would be no whole bodies on the ground if the plane did in fact explode, only pieces.

#235 Brutus on 07.17.14 at 2:06 pm

Reuters has reported that 23 Americans are among those shot down on the Malaysian Boeing 777.

Obama can’t back down on this one like he has done on other international flashpoints.

It is eerie to think of exactly this kind of stuff happening 100 years ago across Europe, this very week in July 1914. Things are lining up grimly.

The weather is warm, people make more stupid decisions in summer than winter about starting conflicts. Nothing will surprise me.

#236 saskatoon on 07.17.14 at 2:21 pm

#190 Carly in Cabbagetown

this is an interesting perspective.

especially…the father/family/economic viability connection.

#237 bdy sktrn on 07.17.14 at 2:22 pm

#234 Sheane Wallace on 07.17.14 at 2:05 pm
All the pictures of the Malaysian Jet are supporting the case that the plane did hit the ground as a whole in compact state, most if not all of the wreckage is in one place.
——————
7km debris field – guaranteed missle hit in air according to experts live on cbc

#238 stop lying on 07.17.14 at 2:37 pm

For the 53rd time: the central bank does not set fixed mortgage rates. – Garth

ugh… I know, but what they say and do affects them. Hello QE and ZIRP. Bond yields are not going to go up much or quickly in this environment.

Today is obvious. Worry about tomorrow. — Garth

#239 young & foolish on 07.17.14 at 2:42 pm

There seem to be many senior American economists and commentators who have serious doubts about the economy (i.e. Paul Craig Roberts, John Mauldin, etc.), but here, Garth remains a steadfast optimist.

Who should we believe?

Who cares who you believe? But choose wisely. — Garth

#240 bob on 07.17.14 at 2:53 pm

Garth – from your comments, I see you have missed one extremely important cultural information in your analysis:

Often, a husband will stay in China to make money
and send the wife/kids overseas (e.g. Vancouver west end). This is a sticky point, as our government have allowed them to come as residents, and in many cases, become Canadian.

I admit I am naive on this fact — do they bring net benefit to the rest of Canadians? i.e. if the wife and kids have no earned income in Canada, they aren’t paying taxes, except for consumption taxes. And if you may recall, large swaths of Richmond, BC voted to scrap the HST.

Your thoughts on this?

I suspect this is where the discrepancy between observations on the ground differ than the available statistics.

#241 Mark on 07.17.14 at 3:23 pm

“Higher interest rates, not inflation. “

Always associated with each other, over the long term. As savers won’t deliberately lend their savings at an inflation-adjusted loss. They might do so temporarily, but obviously not sustainably.

#242 };-) aka Devil's Advocate on 07.17.14 at 3:34 pm

#217 Ogopogo on 07.17.14 at 12:32 pm

#199 MoneyMyHoney on 07.17.14 at 10:49 am

Right now it is the home owners that rule. Renters (including me) are the losers.

Speak for yourself, loser. As a savvy renter-investor, my double-digit ROI has outpaced housing price declines in Kelowna by orders of magnitude. The same can be said for just about any rent-vs-own scenario in Canada.

But don’t let the maths get in your way.

Even if you were the savvy a renter-investor you profess to be, your comments on the Kelowna real estate market have clearly indicated you haven’t a clue on at least that front.

And I can’t help but remind you, before calling MoneyMyHoney names, he who laughs last laughs best and we are far from done with this SHIFT Ogopogo. };-)

#243 Carly in Cabbagetown on 07.17.14 at 3:36 pm

#218 Ralph Cramdown

Oh my, seems like I touched a nerve.

Your “argument” against mine is poorly done and inherently self-serving. I note that you are one of those here who have attempted to archly and superciliously perpetuate the anti-HAM ideology. Your comments to me merely continue that.

You say my comparison is “lame” but you are not “disputing it” or saying it “isn’t true”.

Huh?

Is that just so you can call it “crap”, for no good reason?

Seems to be.

Note how I try to draw commonalities across all groups, including immigrants who are Canadians as equals in comparison to others born here. My approach is inclusive; families are all families in Canada, wherever they may have come from.

You, on the other hand, perpetuate this anti-HAM nonsense, trying to further distinguish the “other”-ness of immigrants, saying they must be exceptional examples of their cultures (“most successful”), or the women have “fewer choices”, hence presumably another rationale why families stay together more. (You could play this game endlessly to the detriment of the Canadian-born as well, don’t you realize)

I actually know that immigrants are quite diverse, and there is little point in stereotyping them or minimizing their successes as you do, to support your anti-HAM hypothesis.

You are guilty of a clumsy reasoning error here – rather than dealing in realities of people, born here or immigrants to Canada, you choose to go out on a limb, comparing settled immigrant Canadians to a hypothetical imagining of what it might be like in their countries of origin.

All in defense of your anti-HAM nostrums.

Your comment is really just ‘spin’.

In seeking to entrench the “other-ness” of people of different origins, and avoid examination of your own culture and precepts, it is also rather offensive when you think about it.

And quite dim.

#244 Smoking Man on 07.17.14 at 3:44 pm

Huge move on bond yields today…. In fact all last week.

Down down down….. You got fighting room with your mortgage broker if you are renewing…. Push for a five year at 2.5% and see where you land.

#245 Brutus on 07.17.14 at 3:45 pm

Israel has just begun a ground offensive in Gaza.

Holy shit. This could all come together so badly.

#246 TurnerNation on 07.17.14 at 3:54 pm

Got VIX? Elites primed us using World Cup now it’s the real action. Country vs country. All marked out using computer simulations.

#247 Son of Ponzi on 07.17.14 at 3:54 pm

Many cultural relativists on this blog.
Saying “except for the Indians, we all are immigrants” etc.
I think it’s a little more complicated than this.

#248 Mark on 07.17.14 at 4:04 pm

“However some communities attract a far higher proportion of house buyers who earned their money somewhere else and whose financial capacity is not tied to local earnings trends.”

Even “old-money” generates income, and appears in the income statistics. So a community that is, hypothetically, comprised entirely of “old money” or this hypothetical “HAM” should still display a reasonable house price to income ratio.

If anything, in a place like Victoria, income may very well be significantly augmented because “old money” eventually dies, and estates often leave behind significant RRSP tax hits (the entire RRSP/RRIF gets T4-RSP’ed) and final reconciliation of taxes on deferred capital gains.

The hypothetical “Moose Jaw car dealer” would still have a pretty hefty income nonetheless. Most likely invested in something resembling the sort of portfolios Garth speaks of here.

#249 Eric on 07.17.14 at 4:07 pm

Mortgage rates will definitely be increasing, regardless of central bank actions. And house prices have not doubled in the past five years. Sorry you’re a loser, but you are probably the architect of your own situation. — Garth

Yes rates will go up. But very very marginally and certainly not north of 4%-5% that you are predicting. And you know.

Well, wait and see. — Garth

#250 Mixed Bag on 07.17.14 at 4:12 pm

#244 Smoking Man on 07.17.14 at 3:44 pm

Huge move on bond yields today…. In fact all last week.

Down down down….. You got fighting room with your mortgage broker if you are renewing…. Push for a five year at 2.5% and see where you land.

———-

Alas, my renewal was two months ago. Got a two-year for the same. Will probably still be available in two years.

You renewed for two years? Probably the worst choice possible. — Garth

#251 Steevee on 07.17.14 at 4:15 pm

Can Garth or anyone else provide any information on arms-length mortgages? A friend was banging on about how great an investment they are while we were having a beer last night. Sounds a little risky to me but I am an uneducated heathen.

Cheers.

Steevee

A mortgage held on your own property through a vehicle such as an RRSP, or investing in a company holding private mortgages? The former isn’t currently worth the effort. The latter could be suicidal. — Garth

#252 Steevee on 07.17.14 at 4:23 pm

Hi Garth,

Yes, I meant the latter (investing in private mortgages via one’s RRSP). It certainly sounded risky to me, although my buddy figured he was the smartest guy on the patio. May have been the pints, I suppose.

Steevee

Yep, the beer talked. — Garth

#253 Spiltbongwater on 07.17.14 at 4:26 pm

MS bought a Nokia division and added 20,000 to its payroll. Non-event. –Garth

It is a non event if you don’t work in the Nokia division. After losing the full time job, they can collect shopping carts at Wal-Mart part time and the stats will not show the job loss.

It is a non-event in terms of the US economic recovery, which is the context that it was brought up in (as you well know, but choose to ignore). — Garth

#254 Mixed Bag on 07.17.14 at 4:34 pm

#250 Mixed Bag on 07.17.14 at 4:12 pm

You renewed for two years? Probably the worst choice possible. — Garth

—————-

We’ll see.

#255 cynically on 07.17.14 at 4:53 pm

# 243 Carly in C.

Get off your high horse Lady Godiva.

#256 young & foolish on 07.17.14 at 5:00 pm

Who cares who you believe? But choose wisely. — Garth

That’s the point … to choose wisely. So, we come here to look for encouragement and inspiration. There are many seemingly credible sources who challenge America’s (and by extension Canada’s) economic sustainability. We are confronted with multiple perspectives.

Your blog, your perspective …. we get that. But many people invest on your advice.

Ask how they have done. — Garth

#257 };-) aka Devil's Advocate on 07.17.14 at 5:11 pm

I’m interested in the number/percent of the Canadian populace who is originally of Landed Immigrant Status.

And then I’d be interested in knowing what the ethnic breakdown is.

And then I’d like to know how that has changed over the last 5/10/20 years.

Then go find it. — Garth

#258 Yummy HAM on 07.17.14 at 5:13 pm

Contrary to what you are saying Garth, HAM is live and kicking over here in Vancouver. Perhaps the reason you deny that HAM has any significant influence on the Vancouver market is that your argument that prices will fall is based on the fact that incomes and home prices do not correlate. If you were to accept that HAM does play a role then it would mean that maybe prices in Vancouver may not be falling since it does not need local incomes to support it. Therefore by accepting that, your argument goes out the window and investing in the vancouver market would not be as bad as you make it out to be.

#259 Ralph Cramdown on 07.17.14 at 5:15 pm

#243 Carly in Cabbagetown — “Oh my, seems like I touched a nerve.”

Nope, and I don’t even see any evidence for that guess. I said that comparing immigrants to natives on divorce rates might be iffy. That seems pretty obvious given the nineteen differentials an average person can name between natives and immigrants. But not to you, apparently. Give us a 2×2 grid of divorce rates among Canadians who’ve emigrated, who’ve stayed here, foreigners who’ve immigrated and who’ve stayed home. No? Well then you’re just making up a story. Please don’t integrate my pointing that out into it a la “Cramdown says x therefore not x!”

#260 Josh Renning on 07.17.14 at 5:24 pm

Good luck waiting for bond yields to provide income on your investments.

Canada 10 year bonds 2.13%, 30 years 2.69%

U.S. 10 year bonds 2.44%, 30 years 3.26%

Reward irresponsible, gullible debt junkies.

#261 Ilona on 07.17.14 at 5:38 pm

So what happened to boycott? Or was it the Boy Scout? lol

Saw the news on Globe & Mail, but couldn’t read it as I’m not the Unlimited Subscriber:

Are Canada’s provinces too exposed to the ‘mood’ of foreign investors? 4:04 PM 07/17

2 planes crashed – and those damned emerging markets etfs only slighly dipped… *sigh* People are so heartless fearless these days!

#262 Teacher's Ass-istant on 07.17.14 at 5:41 pm

Why do so many of you keep saying CHMC has 900 billion in subprime. The last quarterly report says they have 555 in force insurance. It also says, under securitization, 400 billion. A large part of the insurance is portfolio insurance that the banks have used to secure mortgages with downpayments of 20% or more and are low risk. Then there is this small flaw in the 900B theory.

“Managing Within the Total Outstanding Insured Loans Limit

CMHC’s mortgage loan insurance in-force is limited by legislation to a maximum of $600 billion. At the end of the first quarter of 2014, CMHC’s total insurance-in-force was $555 billion, $2 billion lower than the insurance-in-force at year-end 2013 as mortgage repayments have more than offset new insurance written. Insurance-in-force is expected to continue to decline in 2014 when further government limitations on portfolio insurance are introduced.

More information on CMHC’s insurance-in-force is available in CMHC’s most recent Quarterly Financial Report (as at March 31, 2014).”

Granted a real estate crash would be harmful but it certainly doesn’t appear that it would be some grave catastrophy like so many of you like to preach.

Look it up for yourself http://cmhc.ca/en/corp/about/core/upload/Q12014-CMHC-QFR_EN.pdf

#263 Carly in Cabbagetown on 07.17.14 at 6:01 pm

#260 Ralph Cramdown

Oooh Ralph, you are still sooo touchy, aren’t you.

Once again, you demonstrate your faulty reasoning, in aid of your cloaked bigotry.

Why must we divide up immigrants into little groups like you suggest, and subdivide and multiply until we find some integers that support your anti-HAM (which is really anti-Asian) thesis?

Aren’t we/they all just Canadians? Can’t we talk about ourselves, compare and contrast just on that basis?

Your continuing desire to demonstrate how immigrants are different, how they are the “other” is appalling.

It is bigotry.

#264 wes coast on 07.17.14 at 10:03 pm

#190 Carly in Cabbagetown

Interesting point of view. Interesting that Garth allowed racism against white men to flourish. Replace that post with any other demographic and everyone would be up in arms. Interesting to think that immigrant families don’t have adultery – what a joke. The difference is immigrant women are often socially beholden to their husbands and would never risk the shame of divorce. How rediculous to further blame men for divorce in general. In japan they launched a site to help people covertly cheat and over half the site users are women.

I agree our moral fabric is eroding and this has dire consequences but your racial stereotype of white men is as wrong as any form of racism. That Garth did not respond with equally harsh words as he does for other xenophobic comments is disappointing.

One thing many strong immigrant families have is a deep routed relationship with God, something we as Canadians have tossed out the window as we grew in prosperity. The good news is none are ‘losers’ but some are ‘lost’, they can be found and should never be written off. (for clarity i am not speaking about prayer in school or any of that) – i mean a personal relationship with God and living under his guidance for everyone’s benefit.

#265 wes coast on 07.17.14 at 10:18 pm

#229 YO

Well said. If there is an opinion that matters here it YO’s. He’s born here, is Asian, has lived on both sides of the pond and acknowledges that HCM – hot corrupt money – is definitely a factor taking out the 9 to 5 folks. If we can strip out the race component we would actually have a viable discussion. Too bad for us but good job YO for framing the situation so clearly

#266 Vicpaul9 on 07.18.14 at 12:23 am

#190 Carly from Cabbagetown

You have spewed a defamatory, anecdotal thesis about how “white man bad” is solely responsible for the divorce rate among white couples ( no studies cited, no real evidence – just vitriol). In your self-serving narrow- mindedness, you completely neglect to mention the other variable in the equation – white women ( specifically North American white women). No mention of the role that feminism/equal-opportunity has played in narrowing opportunities for your targeted group. No acknowledgement of wide-spread sense of entitlement and the pervasive “I deserve” attitude among the “empowered” new-age white women. Here’s some anecdotal evidence for you – ask a woman new to Canada what she thinks of Canadian women – she’ll tell you she’s offended how arrogant and self-serving a great many of them are.
Geez, sweeping generalizations are tiring……and stupid.

#267 Lawboy on 07.18.14 at 7:42 am

#267 Vicpaul9

As someone with a passing familiarity with the law, do you realize what a freaking dinosaur you sound like here?

You think women, under our Charter of Rights, should not expect “empowerment”, “equal opportunity”?

Wow? Put em back in the kitchen then, eh?

And so what if work for women reduces jobs for me. Suck it up, buttercup! Women still make less than 75% of what men do here, for comparable work.

I am a white male and have practised in business and family law for two decades. In family law, it is almost always the males who have #@!ed up, and in corporate law, women are still mostly invisible.

You and wescoast and ralph cramdown make me embarrassed to be a man, for your simplistic stupidity.

You get so pissed simply because a woman dares to come and play in the little sandbox here.

Try counting all the comments that have been on here, stereotyping women as “house horny” or needing to have their emotions managed etc…

A little back in the faces of white males making such comments repeatedly, over and over here, is only fair play. We should have more of it here.

#268 Clyde on 07.18.14 at 11:52 am

Victoria is a completely different market than Vancouver and anyone living there will tell you that. I live in Vancouver and all you need to do is look around and see all the Asian families walking around, along with Russian and Persian. We have realtor friends here and they say 40% of their sales are made by Asians. Most realty websites now have a Chinese realtor to help with the language barrier and sell. My husband is a commercial realtor here selling apartment buildings- guess who is the majority selling and buying, Chinese, and not Canadian born, they can barely speak english. Many are renting here, including us. Our landlords live in Hong Kong and so are many others. There are numerous character homes being torn down and new being built, that are left empty. If you live here, you see what is really going on and no one will convince me of anything different. Those are the facts.

#269 Di on 07.19.14 at 12:03 am

Well said Clyde and completely accurate. Unfortunately, Garth has his blinders on and won’t listen.